CPA Review Schoul oi the Philippines

/ May
2014
B\Jsiat-�s Law
DO Dela Cruz
Jlir-e-week Lecture

k. to give a determinate thing, w�t rig,hts are available to the credito

r?
no obligation
.,

:First Answer - To comp el specific performance

.
.
Second Answer
.

To recover damages in case of bread of the obligation

·

the d eb � r.
-- Answer- To ask that the obligation be comol
ied with at the expen se of
Third
c. Only tb� ftr,.,�.t·. answer is correct
_
a. .·\�\ answers are coITtCl .
b Onlv the first and second answers are com�ct
. .
·
d. All answers are wrong ·

!.. Thi.:. following contracts, except one, are v?id ab init10. \ vhich is the
exception?

a. That whose object is outside the comme,rce of men. .

l). That whose object did not :!x.ist at the time of the trau:sactlon
c. Tha t which c ontemplates an impossible service
d. That which is undertaken in fraud of creditors.

capac 1·_tated� bY mean. s of fraud indu1;ed S

- to
at P::.O.OOv.
sell
m i nor, owns a spe c i fic property , r,
.- .

.
valued u
ts correct.?
3. S, .

to him for P30,00·J, which S did so. The co ritract ism wntmg. Which
•

b,is property •

a. The contract is va l i d and binding from the start

b. The contract remains unenforceable·b�ause it fails under the Statute of Frau . �
c. The contract i3 rescissibl e because the ward suffered 1esion by more than 1/4 ot the value.
<l. The c ontract is voidab le anl B can ask for annulmen:. within the period prescribed �y law..

4. Legal compensation is al lowed when one ofth'e debts

a. 1-\rises from a sale of real property made by a mino1 :o a capacitated person
b. Arises from the obligation of a depositruy
c. Consists in civil liability arising from a pt:n..J. oilea�·:
d. Ar�ses from a claim for support0by gratuitous tiJle · ,

5. Thi� is not a characteristic of a void

.

or mexistent conti:acL
a. The.right to raise a de fens e of illegality cannot be v,·� 1ived
The action or defense for cleclaration of the nullity o· inexi stence of the � ontrac t does not prescribe
•
b.
c. Not su�ject to ratification
d. Defense uf iHegalny of the contract is available l(J tb ird persons
.
who se interest are not directly affe cteci
.

6. Reformation is nm the proper remedy i f

a. The mutual mistake of the parties causes tlie failure of the instrument to disclose their real agreement
b. One party was mistaken aud the other acted fraudul� mty or ineq ui tably in such a way that the ins rument
t
ooes not show their true in cention
c There was mistake, fraud, inequitable conduct or ac:-ident which pr evented the-meeting of1he minds of
tr.e contracting parties
d. Tbe true i nten tion of the contracting parties is not e:,pressed in the instrument purporting to embody the
:tgreei:nent by reason of mistake, fraud, inequitable
·

co nduct or accident

7. The roilowingcontracts are defective. Which one is unenforceable?

a: Contract of sale by which a guardian acquires the property of h i s ward
without the approval of the
;_:.)IJT1
b. Con�act of sale by which a city mayor acquir
.

enacted by the City Cow1cil

es a :mrtion· of the ci
·
ty plitf pursuant to a city ordinance .
· · ·

c. 2ontracts whose ob ect is t,1Utside the comm

j '

erce of nan
Those were both parties ar:! incapable
t>f giving c o m ent to a contr ct
<l.
a
8.
.

Whic�hof the following _is not a requisite of frauo?

�- There must be a m1srepres•:!ntation
..

e fraud must be seriou

or concealment
s
...,_

�-party is �
� . tie fraud nci cpledoby u
fraud to enter into con
yed by both parties upo
is_ t:m
tract
n each oti.tr
 -

9. J agree.d to pay his debt and in case of non-pa!¥inent,

to render free service as a servant. Is the �b�··i
valid.
a. No, the obligation to pay a11d to render service as a S1!rvan
t is contrary t� law and ?1orals.

1 of the debt and m case of non-performance, the

b. yes, if fhe services wi be rendered in satisfactioi
II
. .
proper reme<ly is specific ;.1erfonnance . . .
c. No the nullity of the condi tion carries with it the nullity of
the pnnc1pal obhgat10n .
d. ye�, in so far as the ob li ga ti on to pay but not as regards the undertak ing to render domestic services for

free.

a manufacturer of locks, hired A for 2 years, on the condition that for 5 years, A should not engnge_ 'in
, afr�r regairnr:g
10. E,
competitive loch business. Ai.ter one year. A left for n asons of .i'1ca.lth. Shortly afterwards
.
hi� ;1ealth, A competed with E, who now seek.s
·
.liim from �uoi:�ompetition, will the action
tQ re:>tram ·
prosper?
a. No, the restriction is void, ,1ecause it is an unreasoruule restraint of trade
b. Yes, i t is a restraint, �onsidering that it W<.S only for 5 years.
reasonable
c. No, the contract of employment for 2 years was not c9mpleted because of a justifiable reason ·
d. Yes, if E will allow A to complete the 2 years servic� s agreed upon.

11. Which of the following is n ot correct in rescissil)Ii?

a. Cannot be availed when the party w!lo has been aamaged has other legal remedy
b. The person who seeks resc.ssion must b(;! able to return what he ought to return
c .. The object of contract is not in the possession of: htrd persons who· have acquired it in good faith ·
the
d. Can be demanded by any of the contrasnng partit:!i

12. A owes B Pl 0,000 with 12% i nte rest. B owes C FL: )0. It wa!; a 12:reed between A and B th at A wouid
give the interest of P i,200 to C and C communicated- his accept�ce 0f the stipulation between A and.
B. ��here is . . ·

a. Stipulation pour atrui c. :=:ompcnsation

b. Pactu m commissorium d. i\Ssignment

L>. -A uonated to Ba rnai propeft:i, th�. donario.n is Irulde or.lllV. . .

- A sold to Ba real property, tr.e sale is made orally� · ,·

a. C:�th contracts are valid Oniy the first cont act is valid
r
b. Both contracts are void
·• .

d.
.
Oi1ly
. the second contract is valid
. ..

14 lf an o b l iga1i on is with a penal �lause

Statement A Proof of actual damages suffered by th::
·- credi mr is not necessary in order that the pe�alrv
ma v be demancL.:d.
•'

Statement B \Vhen the debtor is guilty of fraud · in the fulfillment of the obligation, tfie Gredito can.
- �
demand payment of damages ancj interest in addition to the penalty.
·

.
a. True, True b. False, True :;. False, False cl True, false

15. A, B, and C' solidarily owe D and E P30,000. D remit ted _t�e entire obligation in favor of A , ithout the �
...
consent of E. The effect is
a. A cannot recove r from B and C becauserem1ssion ,n her favor extends to the benefit of B and c
b. A can rec over from B and C thei r respective share c 1f the debt
c. The obligation is not exti;1guished wuiJ A collects !rom Band C
d. The obligation is not yet extinguished until Eis pad by D of her share of the credit

16· Ir. � :.ias i del i ct the liability o a p ers.::-r, who i:; held li101e for tht fault or negligence of anc·ther per�:cn
Wb1.; l� under his c:.tre �)f respo11;:;ibilily shali ceru.c if
·
- ,
•

· · '. ,1:11
•

� !here was contributory negiigen�e on the p ar t of the ;x:rson inj �ed.

.
.
�· de was not present at the t11ne ot the act, hence tt wa:; not possmle
_
to him to prevent the damage�
.

�- ,H.� observed diligence to prevl/nt the d�mag ! .

ordinary
. observed the diligence (If a father ot ;i good ram1b:
!;

. .

s
choice belong
.,
tL�
. . . .. 1 he right of
. ' !S effect
-
cf. the loss or. the prestat�ons altcrfa rive
uon whe re
·
in obh ga •

e creditor and the loss is due to the fault•of the debtor · ve as I't
bu t It
be alternati
".

st ::!!1swer. on e remams the obhg ation stil l sub

Tf only
. . .
. . ce ases t0
. ;ists,
. .
becomes a simple . obligat10n. t he
.
. c.hotee 1s limited. to
If 2 or more remain. the- obligat m
•

�.]��-���\�Answer:
.

subsists and the still •·

objects
·
• •
-

remaining objects.
debtor ch ose not to give
��.hii�d t'l.nflwcr: If none rernams, the obligation is extmguished because the
anything.
.. . , n ers i.s correct .
answers �ffe com�ct .JnJ.y c.. ne of the answ
d. AJ.� a11swers are wrong
·-

:.:. C•ri)y the first and second am wers·arc correct

..

·201 i. On that date, A offored P 10,000,

the.o tilld.y
J 8. A owes B P 20 000 which became due on December 20.
Thereafter A met c' B' s 23 Y·ear ·
.
mon(:y he then had, but B refused to accept the payment .
' · ·
o
to hc�r m ot e t . �
,

daugtrLer, to whom she ga ve tbe p 10,000 ·with the rl!qu·!Si: that s h e tum t h e money over
•

··::-he money was stolen while in C's possession. How muc;1 may B still recover from A?
il. p 20,000 b. P 10.000 C ? 15,000 d. p Q

19. l\., wife of B and daughter of.:, while employed in a 1e,velr. store owned by D em b ezz �
led PlO?,OOO
be longing to said jewelry store. In order to prevent her ::: rirninal pros ec uti on for estafa, B and. C signed
·
a.document obligating themselves jointly a,r;d sev eral h to pay D th e amount embezzled p lu s interest.
Because of their failure to comply with their promise, D brought an actioi:i against B and C. ·will the
-

action prosper?
a. Yes, both knowingly and voluntarily agreed to ass'ume tne obligation of A
b. No, C sho uld not have been included bec ause A is no i•>nger under h.Is authority
c. Yes, but onl y it 1 so far as B is con ce rned because hust a nd and wife are required by law to support each
oi:her
a. No. tt is considered contrary to publi c policy to allow :nuties to make an agreement designed to prevent'
prosecutio n for crimes.

20. A contra� in which a person literally contracts with himse1f is

· a. Adhesion contract b. Auto contrac t c. \ccessory contract d. Unilateral contr:.-.c t

21. The statement "Contracts shall cc obligatory" in whatever ·\1rm they have bee n entered into provided all the
�
requisite s for their validi ty are present" refers �o
a. Real contract b. Consen:;ual c ontracts c. 1.�·orma.; c ontracts , d. Solemn contract s

22. Tµe pre-nuptial agreement ofH and W, husbana and Wll'e, provides for complete separation of prop erty.
Later .. H, with vi ol ence and intimidation forced W t<? seil 1•' rim ( H), W s pieces of jewelry. The sa le is
a. Rescissibie, if W :;uffered a lesi on of more 1 han 1/4 of the value of the property
b. Voidable. because: the consent of W is vitiat�d
t;. Unenforceable, if c.he value is at ieast P500
<l. Void because hill band and wife aw not alkwed to sell property to each ot her
,

23. This obli gation is demandable at once

<.i.. With a suspensive condition c. When my mear:s perm it me to do so
b. With a period ir. diern d. 'Nhen it depend� on the happening of a sp ecified event

24. This contract is with out effect unless rat1fitd

Marriage betwee n fust degre < : cou�ins (. Cmitrad. pf sale between a guardian and his ward
. .
.
a.
b.
.

Conttact of sale between two insane persons c. Donati m between h usb a nd and wife

25, One of the.following is void

a. Policitation b.Pactum comrnissorium �- Stipula1 ion pour atru1 d. Waiver intenrionada

26. To be valid and enforceable, the :allowing contracts shou1c be in writing_ except:
a. Contract to pay inte rest on lorui c. Contract giving authority to an agent to sell a piece.of land
b. Contract of donation of real pr.Jperty d. Contract rr.adc in .consideration of marriage
_$

··
� · · ·1· be ms reg ard ed and will the refore make tbe �i:>lig
ati<)n
27. A ·�ond1tion which 1f 1mposec. on w1 1
n
an
· · · ·
ub11gat10n .

. .
•

immediately demandable. .
a. .If Lala ki l ls Lele c. lf Lo lo comrmts swc1de .
b. lf Lili passes the CPA board exam£ d. lf Lulu wili not rise from the aead

28. If :the · 1aw or contract does not st ate the diligence which is t o be obse rved in the perfomuµi
ce of an

obhgation, the obligor i s expec ted to observe. r

a Ordinary·diligence ..:: . Dil igence of a father of a good family

b. Ex.1:raordinary diligence J. Utmost care

29. Facultative as distinguished fro:n alternat ive obligation

a. The right of choice is given only to the debtor
b. 'f arious t hi ngs are d ue, but' be giving of one is sufficient
c. .If one of the prestations is il legal , the others may be valid and the obligation remains
cl 1f it is unpossi ble to gJ·vc ail exceot •"DC d"iat :ast one 1:1ust stdl be �
. . - ' . '. 11:11
given
••
•

30. Witru n what period must recovery be made if t he debtor did not know that payment was not yet due?
•

a. Before maturity with regard to both what was paid :me the interest
h. Even after maturi ty with regard to both the interest anc! what was paid
c
.
Before maturity with regard to what was µaid and ever .after maturity with regard to the intere�:t
d. Before maturity with re gard .o inte re st and e\len after tne m at urity with regard to what was pmd

31. Vvhich of the fol low ing is wrong in alternative obligations''

D. The obligor shall completely perform one of them
b. The obIigee can n ot be compe Ued to receive pail of ont' and part of the other undertaking
c. The ri ght of choice b elongs to the creditor, unless it ha; b een expressly granted to the debtor
d. The debt or shall have no rigt1t to choose.those prestati :ms which are impossible

32. A remedy in equity by means 11f whi ch a wrinen instrument 1s made or construed so as to express or
conform to the real intenti on of the part ies when some erroi or mistak e has been committed
a. .Rescission b. Annulment c. Refo rm at io n d. Consideration
.

33. Pay1rnmt by cession a� distinguisli�d from dation in payment

:1. The debtor is not necessarily i·;i a state of ti nancial difficulty .
is to n:lease the debror f<�r the net proceeds oi .the tbmgs ceded or assigned.
.

I>. Th-= er1ect

•

c. Thi: property is alienated by the debtor to the credit'or i.n satlsfaction of a debt in money.
d. What Is delivered by lhe debtor i.s merely a thmg to be ·�onsidered as t he equivalent of the performance
. . , · .
of the obligation
.

p ays an o bligat ion. What are the righ t s , which are available to him if he pays the
34. 1f a third person
owledge and �onsem of the debtor' >
.
obiigatwn with the Jrn
an recover trom the debtor tl;1e en t.1re amount; which he bas paid.
.
First Ans wer - l-k c
e is subroga :ed to all of the rights oft1e :reditor.
Seco nd-Answer-H
e b. True, .!•alse c. False, True
.
a. True. Tru
d. False, False

iorati on of the thing intended as a substi:ute through the negligence of the obligor, does
The loss or deter
not ;ender . .
him liab le
.
maf 1e!y bound by different presta tto m-. shal l c ompletely perform one of them
.
ers on a
ll. A P
lte
b True, false: c. F a l se, trut:
r

d False' false
a. True,
true
·
·

m) expre-
ss stipulatior1 and if the undertaking is to deliver a determinate thing the payment
Tbere being
' ·

.
de
micile oft he
, ;.;ball b e n1a debtor
creu1.or
do
. ci. 1 of the
a. ' tl�e .

, l\t -· . .

.�1 t��� �� m
'Nht;!:.. " '...r
�
the 1 i n .
i
mig nt be at ll:e moment me
the
oo�ga9on
was constituted·· � •&:•
ah
tg. mi "" t
the th.tn
be at m oment the obltgatton to be fulfilled 1s
W bcrever.
 /nidi oft�� following statements is not cor
. rect?
The validity and compl 1' ance of a contract cannot be . . eft
�
.
m case of 1or
� eclosure and the pnce · ..
to the will of one of the parties
t th
·

sale IS le )S than the amount due the pledgee cannot recover

any
. o e
. defiic1ency
. '
·
·

Person s who Hre prohibited .

. . bY Iaw to enter mto.conuact of donation
.
cannot form uruversal partnership
Actions for fra ud cannot b� wai
.

.
ved
I •

· /I 38. Th nght of- the creditor to exe rci s

e
.
e all the rights of lus debtor to satisfy his claim, except righ1s which :\r0.
' inherent and per so nal on the part
.
of the deb!Or
a. Acti�n subrogatoria
ll:•
b. Action redhibitoria
• • •
.

;.: .· Accion pauliana d Accion quatrti min�ris

-39. An assignor of credit warrants
Solvenc of the deb tor
y As surance of payment
a.
c.

d ·Existence and legality of credit

b. Collectibility

40. A, B and C executed u promis�ry note binding themselves to pay P9,000 to X, Y and Z. The note is now .
·. .
due and demandable. Can the c reditors proc eed against
A alone for the paym ent of t h e entire debt?
'

a. No, each creditor can col l ec L only PJ,000 from A.

n. 'r'es, either X, Y or Z can coUect P9,000 from A.
(:.. No, each creditor can collec-.: only Pl ,000 from A.
J. Yes, since the promissory note is silent with respel:t. to the rights of the creditors, the obligation is
presumed to he s olidary.
. .

41. Using the preceding nu mber, suppose that C is insolvern, can A and B be held liable for C's sna r e in the
obligation?
<L Yes, the debt shall be presumed to he! divided mm as uiany equal shares as there are deb to rs.
h. Yes, but A and B will be liable proponionately.
c. No, the debts are considered distinct from one another
a. .No, only eith er A and B b ut not both will be habl� . · ,

.
42. Using No. 40, suppo se that the obligati on was about to p res cr ibe . but X YvTote a letter to A deman ng gl
for paym�nt of the entire debt. Will this have the effkt of inte rrupting the running of the p eriod qf
prescription?
Y es, because the demand made by X cov ers the entire debt and will therefo re inure to the benefit of the.
•

a.
other creditors.
b. Y es,.insofar as A is concerned but not with regard to B and C .
c No, because the demand should have b¢en made m al l th6 de"tJtors.
d. No, fill the creditors should have made the demand.

43. Using tht! p re ceding number, and prescription sets in, how much can Y co llect from A?
a. P9,000 • b. P3,000 c. Pl,000 d. PO

44. Using the preceding number, how much can X collect from A?
a. P9.000 b. P3,000 c. Pl,000 d.PO

45. Indivi�;ibility as distinguished from solidarity.

tY
a. Plurali of subject is indivisible.
b. When the �bligatio � is converted into one of indem nir, for da� ages beF_a�W ff breach, the character of
the ooilgauon r emams ·
:
c. Refers to the legal tie or vincuium
d. Refers to the pre statio n which constitutes the object of ue obli gation

46. I. When one of the parties has brought an act:ioi1 to enforce H�e instrument. he cann ot subsequen tly ask
for it�. reformation.
IJ. The inj red party may seek re sci ssi on, even after he has < :h os en fulfillment if the latter should I
_I
u

become impossible.
a. True, true b. T rue, fa;.se c. False, tni.e d False, false
 47. Culpa aquiliana as distinguisbe..t from culpa conrracrual
a. ?roof of due diligence in th1� selection and superv1sio1 i of employees is not available 'as a defense
b. i?roof of the contract and of its breach is sufficient prina fac ie to warrant recovery
c. The negligence of the defendant is merely an incidem in the performance of the obligation
d. The source ofliability is the defendant's negligent act or omission itself

48. A passenger on a bus was hw1, b ut in a criminal case againsc the driver, said driver was acquitted. The
victim now sues the ovmer of the truck for culpa contracnial. M ay t�e suit still prosper?
· ·

a. No, this will constitute dout·le jeopardy

o. 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 oftbe contract of carriage and the injuries suffered.
d. !'es, provided he can prove 1 he negligence of the ariv; r.

49. A owes B Pl 1, 000 due on Juiy 2, 2011. Bowes A P6,)00 due on July 3, 2011 ·and P4,000 due on foiy
iO. 2.01 !·Bowes C Pll,000 due on' July 3, 2011. 0n Jub' 3,"2011 B cannot pay C so B assigr.s to Cher ·
credit of Pl 1,000 against A, wiihout the knowledge of A. On J uly 1.0, 20 1 1 , C tries to collect from t:.1he
PJ 1,000. How much can C compel A to pay"?
.
a. Pl l,OOG b. P9,000 c. P5,000 d. Pl,000

Questions .'i0-52: A, B, C and D owe W, {and Z P9,000. On ma.•umy, i10w much can W collect from A?

50. If debtors are joint and creditors are joint

a. f 2,250 b. P3,000 c. P9,000 d.P750
. �
51. If debtors are joint and creditors are solidary
a. P9,000 b. P750 c. P3,000 d. P2_,250
i
52. If the de btors are solidary and creditors are joint
a. 1'750 b. P2,250 C. P9,000 d. P3,000

53. Using the same data in No. 52, but the share of de bto r s 1\. B, C and D in the indebtedness is 1:2:3:4 and.
creditors W, Y and Z is 2:3:5. How much can Y collect from if debtors are joint and cre d i tors aire joint?
B
a.PL800 b P2,700 c. P675 d. P5�0
• • ! •t:•
54. How muc can Z co llect from D, if debtors are solida1y' and 'creditors are joint?
•

q
a. Pl,800 b. Pl,125 c. P3,600 d. P4,,SOO'

55. How much should A pay W, if de: btor are jomt.and cre dito1i are solidary?
a. P"i 80 b. P9,000 c. P2,250 d.P900

56. A lost pt 00,000 in a card game -� ail ed pusoy, but he had r .o m ore cash tc pay in full the winner at the time·
session ended A pr omis ed to pay B, the ·winner, two we·!ks thereafter. A· failed to pay despite the lapse
of tw(I months, so B filed in cou rt a suit to collect the urtpaid amount. Will the collection suit against .A
prosper?
a. Y1!S, if A made a negotiable promissory note.
o. Y•:!S, whether or not a negotiable promissory note was r.1ade by_ A;
c. No, if A has no property to p ::1.y the obligation.
d. No, because pu:;oy is fundamentally a game of chance�

57. A filed a suit for eJectment against B for non-payment of condominium rentals amounting to P 150,000.
During the pendcnc·i of the case B offered and A accep::ed the full amount due as rentals from B who
then file d a motion t;> dismiss the rnit. Is B c orrect ?
a. Yes, the acceptance of the pa.yment constitutes a 'v\ai vt :r of the ejecnnent case.
.
.

Yes, because there is a novarion. •

•
· '

No, che payment should first result to benefit :o A • .

.
1'10, the payment b y B o f the renra
• ls in arrears
. .

1s not ar. abano onment of the eJectment .case.

, .

.
-- -------------
------- -------
 \11as l!mployed as professional driver of B Transit Bus owned bv C. In the course of his work, A hi t a
)d�:s�ian
,'/!�nm·: who was se ri �us ly in1ured and later died . n the hos ital as a result of the _accide nt . .Th<?
p
•

; hem sued the driver and the owner of th e bus for damages. Whi ch . of the followmg statements
is not corre ct?
a. There is a prnsumption of 11egli ge n ce on the. pan of i ne :!mployer C if.a
�er is injured
b. The conviction of A in a criminal case makes C �iab1e for tlie damages ar��1"ng from the crim.mal act
c. The presump tion that C is negli gent is rebuttabl� by proof of observance of ordinary di li ge nce . •

cl The liability of C shall cease when he proves t.h:1t he observed ordinary diligence to prevent the
damage to passengers and pedestrians
·

. 59. N, R and J solidari ly bound themselves to ddiver w S a Honda motorcycle valued at P6C1,00u. The
obligation was not fuifilled through the fault of J. Therrnpon, S filed ari action in court against � and the
court awarded P72,000 to S representing the value of the motorcycle plus damages. Which of the
following situations is valid?
a. If N pays S the P72,000, N can collect from Rand J . >24,000 each.
b. S bas to col le ct P24,000 each from N Rand j to sati::fv the court's award of P72,000
c. N can refuse to pay the penalty b ec ause 1t should be •:harge<l against J, the guilty, party.
, ·
d. If S succeeds in collectim· the P72 000 fro m N' N in tum can collect from R P20,000 a.ad from J
.

P32,000.
..1 '

60. In which of the followi n g debts i:i legal compemration p rop �r? When one of the debts
·

a. Aiises from t he obligation of a deposi tory <:. Arise� from a claim for support by gratuitous title
b. Arises from a voi dab ie contract d. Consi ;ts in civil liability arising from pen!}.l ol fense
. .
6l. A borrowed PI0,000 from Bon Oec.25, 2010. The:: debt i5 rvidenced by a promiss'ory note e xe c ut�d by A
where in �he promised to pay as soon as she has the mo ney or as soon as possible. B ma<ie several
dl: mat1ds upon A for payment, the first, an oral demand 'was made on May 2, 2011 and the la:;t wr.i-tten
demand was dated Septe mbe r 2:), 201 � but up .to now, co1ere 'is no payment of the debt. B sue d A, ¢ill
the case prosper?
a. Y cs, A is in default since May 2, 2011
b. Yc�s. A is in default since Septemoor 25, 2011
c. No, the obligation is subject to a suspensive coxtdition
d. No, the obligation is one with a period and the perio,d ht.s .qot arrived yet

62. On September 25, 2011, A sent a telegram to B in Cebu, offering to sell to B hi s house and lot for P2M,
cash. On the same date, B sent to A a telegram offering to b�y A's same house and lot for P2M. Is th"ere a
perfecrcd contract?
a. �fo, because both telegram are me re offers
b. Yes, a promise to buy and stll a determinate thing for 1 price certain is reciprocally demandable.
c. No, be ca use B did n ot offer ::o buy the house and lot for cash.
d. Yes, being a consensual comract, it is perfected by, mt:re consent

63. Which of the following statement� is not correct?'

,\. The vendor is ooWld to del ; ver the �hing solJ and ;1: acce�sions and accessories in the c ond itio n in
wi:uch they were upon the pertection of the contraCJ · · ' •l:•
•

b. AJJ the fruits of the thing so ld shall pertain to the v�ndor from the day on w hich the c·ontract ,was ·
. p.erfocted . .
c. The vendor shall not be bouud to delivei; the thing sol i, if the v en dee has not paid him the price, or if
no period for the payment bas been fixed m t he contra(:!.
d. The vendor is bound to transfer the ownership of and 1leliver, as well as warrant the thing which is the
object of the sale.
64. As a rule, which of the following contracts of sale is void?
a. B etween two insane persons c. Between h.usb and and wife
b. Between brother and sister d. Between pupil and teacher

-- - -- - _pw-u
r .-o,.u _ _1 ___ - "
- -- -- - -- - - -·- -
\ 65. A and B are co�owners of a oIJe hectare rural land. A soid his Yi share to Y. C, an adjoining
ir;:cerested in buying the shart: which A sold to Y. Which of the followin g is correct?
a. B can redeem what A sol.J to Y if Y aiready oWQ.S '1 rural land
lanci owner !s

b. ti can redeem what A sold to Y even if Y does pot nvp any rural l8:nd
c. As adjoining land-owner C has a superior right to rndeem what A sold to Y.
d. C can redeem what A sold to Y whether or not Y already owns a rural land.
I

I
I
66. A sells'to B ner car for P300,0(10 on a '·sale or return within 10 days'' after deli very. On the 5th day after
I
l delivery, the car was lost through fortuitous event. Who hears the loss?
A under the principle of "�res perit domino" c. Bott A and B jointly .
·, \ a.
b. B and he must pay the purchase price cl No c ne because the loss was due to a fortuitous event
·

\ I
be
. .

\ \I 67. P l and P2 are co-owners of a piece of lund and they namt:d and authorized A to sell their land. V/ho will
liable to A for the payment of his commission?
a. Both P l and :n jointly
.
c. E oth P l and P2 s<? !i � ly even without swpu1auon
.

b. E3o th P l and !)2 solidarily unly if stipulated d. 5 0% froin P l and· soo/J ·from P2 . . ·
I
·

68. J is the oole owner of one hectare of land. In need·of money, she s9ld l/2 of the land without speclfymg
I
which portion she is selling to H. In this case, the saie i s
a. Void, because co-ownership is discouraged by law
b. Void, because the Yz part is not determinate
c. Valid, only if H has paid the purchase pnce
d. Valid as the sole owner of a thing may sell an undivided interest therein
�,\·,
•' <

•' �
69. E owns a piece of land and sells i t to S with a right of repurchase within 4 years from the date of sa.le. If S
. sells the property to T, which of 1 he following is not correc t'? .
a. The sale is valid because things subject to a resolutor r condition maybe the object of a contract of sale
b. :S can still exercise her right: of redemption against T
c. The sale is void because it is a conditional sale
d. T acquires the property but mbject to the right of �on• 1emional redemption
70. In which of the following cases '' ill delivery tran.sfors ownt:rship over the thing sold,
1· 1· .a. ln case of express reservation by the seller unti! certa '.n coniliti on s have been fulfilled, particularly the
foll payment of the purchase price.
b. Ln case of im pl ied reservation of title as when good5 are deliverable to the order of the. selter or his .
·
•

agent.
in sale or approval, or on trial or on satisfaction.
• . \
G.
d. In sale or return within seveH days
·

7 1 . A owns a piece of land and sells it to B with a right of repun :hase within one year from the date of sale.
Can B sell the land he pmchased f:om A, to C, a third party�
a. Yes., provided the sale is with the consent of A.
b. No. B is not yet the absolute owner ofthe lanq .
c. Yes; but A can still redeem the land from C.

d. N o . third parties that acquire real property are.bound by prior contracts affecting such property even if
the third person is not a party thereto.

72. When goods are delivered to the buyer on "sale or return' · for a period of seven days, ownership of the
goods· passes to the buyer, .
c. Upon expiration of seven days
a. lipon perfection of the contra:;t
b. Upon delivery of the goods d. Upon acceptance by the buyer of the offer of the seller
·I
3· ln case of foreclosure of the personal propeny mortgaged, where such thing was previously sold to the
�
buye r
. on
t
an installment bas is and tl:e proceeds of the sale at public auction is less than the principal
<lbtlga ic1u. can the seller recover tht! deficiency from the buy( r?
i
I
� .'1.nswer - No. the seller is t1ot entitled to recover the u�ficiency from t1te �r.
co?u An�wer - Yes, if there is a stipulation to that effect in the contract of sale with l
I
mortgage.
1r ue, true False,
b. True, false
·

c. true d. False, false

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---------------
 /
jrement J - If the same thing should have becD sold t.; different vendees, the ownershi p shall be·
·

' ;{nsforrerJ to the person who may have first takeu posse:; ;ion thereof in good faith. .
Atn tement 1. - The vendor is rnsponsible to the vendce !� :r any hidden faults or defects m the thing sold,
.
•

ievcnrhough he wa:> not aware fr:ereof. ·

.

/ a. True, Lrue b. True, fals: c. False, true d. False, false •

.
,.
/75. A, B and C are ·co··owners of a j:>arcel of land, A sold his )/3 share on Sept 1 , 20 1 1 . B his 1 13 share on. Sept
/ 12, 20 1 1 and C his 1/3 share on Sept 25, 20 1 1 , all to l > ami with the right of repurchase. Wluch of. the
,. ·

following, is correct? A may redeem

a. The entire property from [; if he is required by D to . io so.
b. The entire property even if D allows him to redeem /3 share only.
c. His 1 /3 share even if D requires him to redeem the '' bole propeny.
d. His 1/3 share if D allows him to do so.
·

76. A O'Wn� of land, which be sells to B with 'a 3 year . ·edemption period. After the second year, A
a parcel

dies, leaving his children C, D ai1d E as his heirs. Which ..; : · the following is not correct? ·

a. As A c� repurchase the whole thing, so any among 1 : , D and E may repurchase t e whole
thing. �
b. C can redeem bis l/3 share . D his 1/3 share and E bt� i/3 share if B does not reqmre all of them or any
one of them to redeem the whole propeny.
·

B may demand that all the co-heirs come to an agrec1 nent upon the repurchase of the whole thmg sold.
�

c.
d. H cannot be cmnpelled to C·:msent to a partiai redemp :ion.

77. A bought a car from B, a minor, 1 or Pl 00,000. One week le, 1er, A d iscovered that B was a minor at the time
of sale so he filed a complaint in .:ourt to annul the sale \v . I) the <tc ti on prosper?
a. · �t�•- B bei n g a minor is incapacitated to �nw:· mw � 0 1 1 Lract . • •
! '': "
l'lio, the right to annul the sale is given to B
'

b.
Yes, 13 cannot file the action to annul the sale becaus� he is n minor
•

c.
d. No, unless there is lesion of mor� than 114 of the value ;)f the property
.
.
78. Which of the following may not be the o�ject of a contract ' ,f sale?
a. Thing having a potential exi.)tence •.: F Jture inheritance
b. The sale of hope or expectar:cy d. ·� hmgs subjecr to a reso lutory condition •

,. ,,, 79. A, a minor sold his ring to B for P4,000. Utter, 13 borro, ..-ed P6,000 from C and as security pledged the
ring to C. B failed to pay C and the latter foreclosed the p ledge, sol d it at publ ic auction for PS,000 to X:
As a result,
""· The title of B i!; not valid, tht!refore the ]'ledge� of the 1 mg to C is also not valid because in pledge the ·
p.ledgor must be the owner
b. The deficiency .)f Pl ,000 car.not be recovered oy (.. fro�11 B
c. The deficiency of P l ,000 c an be recovered i f there is •.!. stipulation to that effect
d. If X is in bad faith (X bas knowledge that ·A, the origir al owner is a minor) ownership will not pass to
B

80. This shall take place when the venoor reserves the r:Jht tu i , : >urchase the t.h.ing sold
a. Puiicitacion .c. £::,�ui!able mortgage
b. Conventional redemption d. L�:gal redemption
.
8 1 . A sold his piano to B for P200,UOO payable in 1nstallmer�L A chattel mortgage was co nstituted on th�
piano. B defaulted in two installment payn:ieuts . A Jemanae:.i payment of the W1paid ob l igation amoup.ting
to P1 20,000 and a wnt of attachrm:nt was issuea. and the piano was sol d for Pl 00.000. C an A still recover
_
the deficiency?
First an�wer - No, the foreclosw·e of the piano ex!iugui5hed B ' s o bli gation
Second answer - Yes, only if it i:; stipulated that i11 ca<;e or.· for.eclosure the buyer will
•

a. Tme,.True b . True, False

pay any defi ci ency
· c. Fals �. True d. False, False

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 .
82. A and B entered into a contrac t to sell" in (l)rivate writir. g mvolving a specific parcel of land for ·P2M. B
paid 50% of the purchase price. the balance payab l e in : \' year�. A d el ivered the land to B. · What is the
'' .

·
effect ofthe delivery of the land to B?
a. B is the owner because there was deliverv aireadv
�ership must compel A to execute a deed of sale in a
.

b. B's ownership before it is converted int� real o

public instrument
c. The partial payment made B the owner of the land
d. A is still the owner becaus1! the price is not yet totalI:r paid

83. In 2007, at age 1 6, A sold his land to B. of tegaJ age for f '4M payaole at P l M in 2007, P I M in 2008, P l M
in 2009 and P I M i n 20 1 0 . In 20 1 2, A wants to annul -the contract o n the ground of minority. Wil.l his
action prosper?
No, A is al lowed to ask for annulment of the concrac·c only within 4 years from t he perfection of the
.

a.
contract
b. Yes, A has 4 years counted from .the time he becom� s of legal age to ask for annulment of the contract
c. No, the acce ptance of the in stallment payments amoumed to ratification of the sale. · ·

d. Ye�, provided A was then acting in good faith when M sold the property
.
84. Where it is stipulated t:nat the repurchase of the property sold could be made at any time, the ;�epurc
•
1false
shall be exercised . ...

a. Within four years, from the date of comract

b. Within ten years from the date of the contract
c. After ten years after the date of the contract
Within six years from the date of the contract
•
d.
"'
. .

\!....

I ·��
85. A seller sol d to a buyer a brand new car a a price of F 500,000. At the time· of sale, the buyer has on1v
t ..

I
I
P200,000 cash and his ol d car with a fair market vaiue :)f P300,000 which he offered as payment of th �
I· I
·

purchase price which was accepted by the seller. The nature of the contract is
.I a. Barter b. Exchange c.. Saks rt
d. Pa ly sales and patily barter

86. ln 20 1 0, A, 1 7 years old, sold his land orally to B, of leg11l age, payable in 3 equal annual installments. B
paid in 2010, 20 1 1 and 2012. Which is correct?
a. Th e sale is unenforceable c. A cannot ask for annulment
b. The sale is voidable d. B can ask for annulment

87. J f the tbing sold had any hiddeJt fault Of deteC1. at the l.Ur�e of i.he Sale and ��u!O tberearter be lost by a
fortuJ.tous. event but the seller is not aware of the .defe.;t, how much can the vendee recover from the.
vendor if the selling price on dme of sale is P J 00.000 and the value on date ofloss is P60.000.
a. f 1 00,000
,

b. P60,000. c. P40,000 d. p(l

88. Using the preceding nwnber, e xcept that the loss is L�ollgh the fault of the vendee how much can the
vendee recover from the vendor�
,

a. f'l 00,000 b. P60,000 c. P40,000 d. p(1

89. Which of the fo lo ing contract1: is void?

l w
· a. Lease of a piece of land mac.e hy a minor without a -w1 itten authority from hi� parent
s (the owners)
b. Oral sale of a piece of la d made by the owner to an ii 1s211e person
n
c. Written sale of a gold necklace made wi bout authority from the owner
r
d. Written sale of a piece ofla11d with oral authority fron t the owner
. . ·

90. \Vhich nf the following contract�: is

·

valid? .

r
·

a. Contract of sale between an t nsane person and a deaf-1 nute who does not know how to write and ead
b. Contract of do a i betwee n a husband and his paramour
n t on
c.C onu-act of sale between hu�;banu and wife who are uLder the conjugal partnership of gain,11
d. Con tract of donation between a wife as donee and her former b.oyfriend as dono,r
• I
 7.
;.s an agent, A, was in 1ddition to his regular commission, after he sold 2(}
given a g uarantee commission,
un its ·[)f refrigerators to a customer. The customer, however failed to pay. A's principal, :P demand�d
pavment from A for the customer's accountability. Whic h is correct?.
:·: . /\ can refuse to pay on the ground that his .iob wa:; m
: ly to sell and not to collect payme nt
b. P should dl!mand paym�.nt from the customer · · · u:•
c. A. is not liable if he was authorized to sell on predi t
d. A bears the risk of collection and should pay P the
•

proceeds of the sale

92. The following arc obligations .�f the agent: except . .

a. 1n the execution of the ap.:ency, the agent shall act i 11 accordance with the instructions of th1: pn�crpal
• .

b. Shall be bound to advance the necessary funds, ex( ;ept when the principal is insol11ent
c. Shall finish the business already begun on the deao of the principal, should delay entail any: danger
d. In case a person declines an .agency, he is bound tc observe the diligence of a good father of a famtly
_

in the custody and preservation of the goods fonva:·ded to him by the owner until the latter should .
appoint an age nt . .-,;-
,,
· . .

�;'
93. Which of the following statements is false'?
a. P in writing appoints A as his agent to sell his specific parcel of land for P40,000. A sold it orally to

X. The contract of A and X is valid . .

b B wrote A, his sister, to :;ell his parcel of land. T.1� land was purchased by X, but A did npt �orwaru .

the money to B . B now wants to recover the pared of land. B can recover because the authon ty of S
is not in special power ot attorney
c. P orally aprioints A as his agent t o sell his iand foi P40,000. A sold it to X in wri ti ng,. The sale b y A·
to X is not valid. • ·

<l. P. orally appointed A to sell a house on a parcel c .f 1l{llld belonging to X. A sold it to B oral ly. The
•

contracts by P and A, am! A and B are valid

94. P sends -a letter to A in Cavite.. authorizing A to sell his' specific ca.t for P90,000. ff no reply is made by. A,
is there a presumption of implied agency between the rwo of them? .
a. None, because as between persons who are absent . acceptance of the agency cannot be presumed from
·
the silence of the agent
b. Yes, because no reply was send; there is ah impiied acceptance or implied consent
c. Yes, unless A is habitually engaged in the business of·selling and buying cars
d. None, acceptance must aiways be expressed

95. M appointed R and Z as her agents to sell her specific l)ropeny for P l 00,000, on cash basis. Sohdarity has
been agreed up0n. Can M hold Z liable if R sell me proµeny for P80,000?
a. Yes, because the obligation is solidary
b. No, becaus1! the appointment of 2 or more agents in one and the same obligation is joint and any
stipulation to the contrary is void
c. Yes but only for Z's share that is P I O, 000.
d. No, because R acted beyond the scope of his autho ity

%. Thl following mz.y be objects uf contract of pkdge, ::::L�pl . ••:•

c. Ah ap'icultural land
.. �
a. Sh�es of stocks
b. Pieces ofjewelry d. A negotiable bill of exchange

97. Which of the following is not C"orrect?

a . A movable or immovable: property maybe the objec! of commodatum
b The bailor in commodatum need not be the owner 1 ir the thing loaned
c . A stipulation that the bailee may make use o f the :f r ui t s of tht thing
loaned is vali .
d. The bailor is obliged to pay for the ordinary expemes for the use and preservation of
d
the thing loaned

98. D mortgaged his land to C as !:ecuri_ty for a loan. Fearin � tbreclosure

· of the mortgage due to hi!; inabili'tv to
pay the loan, D sold the land tc without the consent of C. Which is
B ·
correct?
a. The sale is void unless D can give ant)ther securiry
B cannot acquire ownership over the land even if I; deliver
s the land to him
b.
c. . D cannot seU the land if th�re
is an agreement pmhjbiting the mortgagor from alienatin
D can sell the land even without the con.s g the land
ent of C
d. ·

_D.{1,f _Il..I. � - · '- --

\
j 99. The loan of movabie or imrnov:1ble things, but not the fh. i1:;
d. Commodai'um
B

I
.
a. Mutuum b. Delegacion ·: . Expromission ·

.,
I 100. Agreement giving a person the right to enjoy tlie thirtg as well as its fruits .

b. Quantum valebant. c. Usufruct d. Pacto de retro sAle a

I
•
a. Quanhun meruit
'

101. Whicn'of the following statements is not correct?

a. If the thing pledged will be returned by the pledgee the contract of pledge is e�nguished
'

I
· ·

b. Unlawful partnership is v0id ab initio .

c. �.\Dy stipulation allowing the pledgee or mortgage1: to appropriate the thing pledged or mortgaged is 1
void ,
d. In case the creditor foreclosed the chattel mongz g�, he cannot recover any deficiency in case the.
proceeds of the foreclosw·e sale are less than the w1 paid obligation.

102. Com modatum as di stinguishe .I from mutuum

a. Obj ect is money or consumable or iungibte thmg. •J:'I
.·
• • •
b. Ownership is transferred Lo the borrower
c. Object or thing loaned must be recumed by the tJOrrower
d. Maybe gratuitous or onerous

103. F<1r failure of the debtor to nay two installment paymt!nts, the creditor foreclosed ,the chattei mortgage
cons tituted to secure the obli gation amounting to P200,000. The proceeds amounted. to P220,000. · In this
case
a. The debtor gets the P 20,0 00 only if stipulated
. b. Th e debtor gets the P20,000 even if not stipulawd
c. The creditor gets the exce;ss even i f not stipulated
d. The creditor gets the excc:ss whether or not it is sti� ulated

l 04. A pledged his ·Natch to B for P20,000. A failed to pay his obli gation . B sold it at public auction for
P l 8,000. Can B recover the c.eficiency?
a. Yes, even wtthout stipulation c. No, even if there is stipulation
b. Yes, if there is stipulation d. No, unless there is1 stiplilation

105. Using the preceding number, if the sale is for P22,000. :an A recover the excess?
a. Yes, even withom: stipulauon c. No, even if ther� is stipulation .
b. 1:es, ifthere is stipulation · '. d. No, stipulation allowing recove
·
ry is ;oid
·
106. A mortgaged lus car to B for P200,000. A failed pay .his obligation. B sold it at public a uction
to for .
·
P t 80,000. Can B recover the deficiency?
• ' ·
· .

�.L Yes, even withm1t stipula�ion c. No, even if there is stipulation

h. Yes, only if there is stipulation d. No, unless there is stipulation

J 07. Usiug the preceding number, if the sale is for i?220,00(i can A recover the excess?
a. . Yes, even without stipulation c. NC\ even if there is stipulation
•

h. Yes, only if there is stipulation d. No, unless there is stipulation

101{. Similarity between real estate mortgage and antichre!;is

a. The property is delivered to the creditor
b. The subject matter is a re�d prcpe1ty
c. The creditor acquires the jght to receive the fruits of the property
d. The creditor is obliged to pay the taxes and charges upon the estate

9. An o:lth in a contract of chatrnl mortgage where in the parties several l y swears that the mortgage is made
fo. · 'he pumose o f sec uring lhe obli�ation specified .i ' the conditions thereof and for no other purpos�';S
anu ll tat th;� sam:: is ;1 j ust an j valid obligation and on :! n�t �nte rea it1!o� ?;� the purpose of i r:md is .
·

�
<t. Oath ofallegianc:e �
c . Aff:. vtt of good f�1th
d. Eqrnty or redemptlon
. �
· Antichresis
 owes B P5 00 and as security , A pledged hi s 'Cha mond rmg. L ater A borrowed again P 200 . As a result
F3 bas a right . to retain the thing until the P 700 is 1 i:�id
8 1i as a right to retain th .. : thing until th.; p 5 0L. . i::; paia
c. � has a right to demand that thing be deposned ,vith a thin.I person . .
d. has the right to use the i:bing·pledged until �e p i � q�ea effects pay ment of the
•

.;j obJigation

1 1 1 . Rea1 c:state mortgage as distingu i shed from pledge •

a. ·[he debtor is entitled to the exces s of the proceeds if •;ti pulated

b. T he debtor shall not be entit led to the excess of the pr•)ceeds
c. The creditor is not entitled tv the excess of the procee1 is
d. ·111e creditor cannot recover any deficiency

1 1 2. Shouid there be a reasonable grcund to tear the d structio11 or.: impainnent of the thing pledged, without tlie
0
�
fault of .the pl edgee, what is the obligation of the -pledgee : ind what then is the right of the pledgor
.
{i' irst Answer - The pledgee is bound to advice the pl �dgor, withom delay of any danger to t�e thing
pledged
Second Answer - The pledgor \;an demand the return of the thing pledged upon offering another thing in
pledge which is of the same kind as the former and not of inferior quality.
a. . True, true b. True, false c. false, tTL e d. False, false

1 1 3. J m ort gaged his residential land to R as E:,ruarantee for the p1yment of P5 00,000 loan of J. They agreed tha�
J wil l not sell the land while tht: obligation exists. Before the maturity of the mortgage, C offered to buy
•

the land from J . Wh i ch of the fol l o wi n g statements ts corr('ct?

'" · .Icannot sel l th1! land to C b1 cause o f the agrc-cm.;!lll r:.i1 m se ll
0. J can sell the land to C only 1f R consen s in writing
t
c. J can sell the land to C despite the agreement not ro sel I
cl J cannot sell the land to C unless J pays R the obligation

1 1 4. A contract of pledge is
A. A real contract because it is p.:rfected by the delivery 01 · the thing pledged
B. An accessory contract because· it has no independent t: .;istence of its own
a. Only A b. Onl y B c. Both A and B d. Neither A nor B

... 115. Vlhich of the following statement., is not correct?

a . The sale of the thing pledged shall extinguish the pnncipal obligation, whether or not the proceeds
of the sale are equal to the amount of tj-1e principal :>bligation, interest and expenses i n a proper
case
b. If the price of the sale of the thing pledged is more than the obligation, the debtor shaU not t?e
emitled to the excess unless it is otherwise agreed
•

c. If the pri ce of t he thing pledged is less than the Ol>ligation, the creditor shall not be e nt itled to
recover the defi c ien cy, unless it is otherwise agreed
d. At the pub l ic auction. the pledgor or own er may bid an d ne shall have a better r i ght if he shou.l d offer
the same terms as the hig hest bidder
•

1 1 6 . The fo1lowing are essentiai requisites c�mmon to the clmtract� nf0p le dge and mortgage, except,
a.. That they are co11Stituted to se .:. ure the fulfillment of a p� incipal obligation
b. That the pledgor or mortgagor is the absohne owner of tne tliing pledged or mortgaged
·
.

c. That th� contract is registered with the Regi ster of Deed ;

d . That the person constituting [he contract has free ciis1 1osal of his p roperty or that he is authorized·
legally for the purpose

l l 7. Fi�st stat'ement -: In all c ases of extrajudicial sai� , the "ma tg31gor may redeem the property at any time·
. the term ofone year from and after the date of registration
.
Se<:ond sia�ment -. ln judicial fo�losure of real estate m ortgage, the general rule is. that the mmtgagor
withm of the sale.
?.
cannot exercise his nght of redemption after the confirmation of the sale by th
e court. •

a. Both. statements are correct

b. Both statements are wrong
c. Only the first statement is correct
d. Only the s1:cond statement is correct
 I

\l 1 1 8 . A p l edged her
note in writing
CDnvenient
a.
ring to F to secure a P l 0,00.0 obnot
time. As a result ,
l i gati on r ya�le i � ��� :;:�1��y�:� i:���

to A stating that the debt need be sei �re an

�

b oth ex""tmgu�shed.
, e
::�e:i;.�;::�;�

.
. .
.
.
·

contract ot pledge because A did not get bac 1.

The principal obligation and the contract of pledge � re
l i gu 1:
•

b. Only the prin c i p a obliganon is e xt n i sh ed but no the

c. �;t�� principal obligations and the contract of pledge are not extinguished because A :lid not ,get ·

back the ring .

d. The pledge i:; extinguis ed and F is co?stitu ed as a foposuory.
h t .

1 19. This is an accessory contract

a. sales b. mutuum c. •;ommodatum d. moqgage

120. The e are real contracts, excep

s
a comrnodatum b. oeposit c. Jledge d. chattel mortgage
i2 l . Ownership is retained despite delivery, except
a. com.modatum c. univ e sal pa Uie s ip of pr fits
b. mutuurn r rh o d. on triai or satisfa tion c ·

• I

122 . .L pl ed ged his share s secure his ob liga1 iim . Later, L sold his shares to J. As a result,
'
to M of stock to
a. L qm compel M to surrender the shares cer+.1ficate ti> J.
b. J can co pel M to deliver the shares certificate to h:m.
m
c. The refusal ofM to surrender t e shares certificate will invalidate he sa le
h t
d. s i t
M can refuse to urren der the shares cen fi c a es.
. .
123. The creditor can not appropriate the thing pledged pr mof!:gaged, or disposed of them. Any stipulation to
the contrary is void.
The contract of pledge or mortgage may secure all bnds of obligations be they pure or s Llbject to a
suspe nsiv e or resolutory condition .
a True, true b. True, false c. alse, true d. False, false :;-

1 24. A iiniited partnership has J,, as general p e r, B as lim ited partner and C, as indusui�l partner
artn
co ntrib uting Pl 00,000, P50,000 and services respe tive y . The pa1tnershi p failed and after disposing all its
c
as�.ers to pay paitnership debts, there still remains a n te pay abl e in the sum of P30,000. Ag inst whom .
ci c
can the creditor demand payment?
a. A - P30,000 B - PO C - PO c. A - P1 5,000
· B - P7,500 C - P7,500
b. :\. P l 5,000
·- B - PO ( ' - P l 5,000 d. A · · P l O J tOO B -- Pl 0,000 C - P l 0,00(1
..
�
••
125. X, Y, arid Z fonn g •
Y P artnership to enga e in import-exp :) rt business. The partners agreed
:
that the profit
wi l l be di vided
·

on the following rati o : X-20%, Y-30%. Z-50%, but no agreement as to losses. After orre
yc:ir of operation, ther wa� a loss of; PI 0,000. How will you apportion this loss if the
e · capital
contributions are as follow:;: X - P20,000� Y - P 15,0PO; Z - PS,000.
11. According to their capital contribution: X-PS,000; Y-P3750; ·Z-P l ,250

b. Equally among X, Y, and ?

c. X - P2,000; Y - P3,000; Z - PS,000
d. A to make the distribution
third party may be caIJed
126. M, T and E decided to form a universaJ of all resent property.
parmership The contract of partnership �\'as
p
execute d on October 10, 2 0 1 0 but they co.pimenced b si .ness 90 1 8, u October 20 1 1 . One of the fol lowing is
nor correct?
a. If the p nership is for 1
art :' years, b�t one of the pa rtners withdraws from the partnership the 12th on

y..:ar, the fim1 is di ss o l ved

The partnership began its �xistence on October 1 0, :.010.
If after the expiration o:: · its term, partners ;ontinue to transact business,
the the partnership is
converted to a partnership at will
.In the absence of any. partnership agreement speci fically covering th� division of l s es among th;; · ? -s

\)artners, thev will be deemed to share the losses in L�cor. �ce with their caprtal contnbut10ns
.
.
·

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Fartr.ers A, B a nd C met a ti agic accident. A and B 11 stantl y died on the spot, while C was broug t !0 tJ.1e
h
hospital but died a few hour� later. Who may wmd-up partnersh i p affairs?
1. li:: gal repres\!ntati ve of A . c. legal representative c f C
r�presenratjye! wr.o will wind-up tlie
.·

. : . !·�gal repres1�ntarive o f B d. the should t�pp1

affairs
cornt 1m a
.

?
.

'1 2&. A B, 'and C agreed to forrr , Y Pannership. lt was )rally agreed

that A woul d contribute P20; 00 B ,.

P l 5,000, and C P5,00 0. It w.:is also orally agreed that :n the tvent the venture proved
to be a financial loss
e were no otber e xpress
all losses above the amounts of capital ccmtributed wo .ild be assume d by A Th er
agreements. U nder these circumstances \Vhich of the teHowi ng is correct? .
:i .Profits are to b e divided i n accordan e with th e w1st1 of A being the major contributor
� .
.
b. Profits are to be divided E qually
wntmg
. .
c . The partnership is a nullity because the agreement is not contained in a signed

d . Partnership is valid notwilhstanding failure to p ut the agreement in a public instrume

nt

1. 29. In the preceding question if alter exhausting the panner mip capital of P40,000. there is st ill a liability to X
in the amount of P40,000 the liability oftbe partne rs t11 X will be :
·

a. A, P20,000; B P l S ,000; lli1d C P5 ,000

b. A will shoulder all P40,0l 0 beca us e that was their ;.i !lreement
c. Another agreement will be executed as to who will ;�swer losses
d. AU of them will be liable to X

l 30. Which of the fol l owing is true with re spect to a liimted f &rtne r?
a. M ust not own limited-partnership interests in other l ·om peting li mited partner�hip .
b. ls a utomatica ll y an agent "'.or the partnershi p \vith appftfent authority to b i n d the limited pa1tnership in .
· ·

contract
c. Has no liabihry to crediton; even if he takes part in ihe contro l of the business as l on g as he is hdd'out
.

'
·

as being a limited partn er

d. Shottld not contribute industry

1 3 1 . A, B and C formed a Universal P artner ship of profits. Tile partners c ontrib uted the following:
A - 20 sewing rnachim:sB - 14 Furniture & Fixtures C - 4-storey building
The parties agreed that onl y tl te use and fruits uf tl}e o. >JeftS 0onrri buted shall pertain to the partnership.
W hi c� of the following statemehts is true?
a. The partnership upon delivery shall be the owne r of 1 he objects contributed
b. Upon dissolution, the objects shall be c onvertea into cash and the proceeds shall be div iddi equally
among ilie pa1:tners including the fiuits
c. Du ring the te rm of the partnership, the contributing partner remains to be the naked owner of the
. object contrib ute d but upon dissolution all object� contributed are to be converted into �ash and
proceeds shall be divide d e::iually among t he thre e pa rtners
d. During the term of the par tners hip the loss of the
, c bjects contributed shall be borne by the partners
concerned.
·

1 32 If a ·,Jartner ass i gn�; his int erest n the pannershi:-1 ro iiis n : rs onal creditor or to a thi rd person for value' tht:
acquires the nght to
ass1_:;nl!e · •
• • ! •t:•
•
•

a. :
)emtlll d an acco unt in g of p artn er shi p affair s
b. ..nspect the books and recods of the pannership
c. Receive the partner � assignor's share of the profits
d . lnterfere in the manag emem of the partn ership
·

133. The parmers agreed that only the use and fruits of t he ob jects .
contributed shall pertain· to the P•l . rtnership
•

(Un ersal partnership of profit:;J . Which of the followi

�� n,; st atement s is true?
;i he partnershi p upon delivery shall be
�- _
the- 0\'V?ler of1he objects contributed
the objec rs shall be c onvened mtc cash and
the proceeds sha 11 be div1 .
. ·de d equal1y
' · dpon d1ssolut10n,
among t h e partners includinir the fruits
e par ers hip, the contributin,, artner r
�
.

�- During the term of th

Obj ect contrib uted thereto but upon di sso luti on all ob?1 ·�s
a · n to b the na
s �� � �
ked �wner of the.
· proceeds shall be divided equally aino
: • con u e are to e converted mto cash
ng the partners
and
d ounn ·
g the tem1 of the partnership, the loss
ob1·· cts contri
·
·

of the
borne by the partner concerr-
. . bute Ci due to fortwtl'lus event:; s hall be
·

,ed except if the. ob� ect comn. buted 1s

·

. ,
�

fungible · ·

L
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I

1 34. Which of the following is a characteristic of partnershI;) as a conrract

a. Preparatory b. Fonnal c. lnnemin ate d. Gratuitous

135. S and G estab l i shed a partnership by comributing P2CO,OOO each. F, a classmate allowed his name 'tQ be .
included in the finn name of the partnership '. The'pm1nership was in solvent and after exhausting all the
remaining assets, there remains a Jiabil ity to th1rd ;>ersons amounting to P30,000. The creditors can
·
.

compel
a. . Either S or G or F to pay the P30,000 liability ::. S and G to pay P1 5,000 each
b. Ei t her S or G to pay the PJ 0,000 liability J. S. G a nd F to pay Pl 0,000 each

136. U sing the preceding number , If the partnershi p is sol 1ent and there is a profi t of P30,000, 1�thout any
stipulation a� regards profit snaring, the participation 1r· the partners on the profit will be
a. Just and equitabl0 sluu-e Lir F, and the rem ainde r, equ ally between S and G
b. Equally, P I 0,000 each an:ong S, G and F
c.. Equally P l 5,000 each between S and G
d. The court will intervene
. . . 11:• .
137. A limjt�d partner who talces active participation in ttie n tcinagement of the p artnersh�p shall b'ecome
•

•
a. A managing partner c. L iable as a general part ner
b A general partner d. P n o stensib le partner

1 3 8 . Three of the following are ri g ht s of a partn�r, which one is not'' Right to

a. Associate another person ro his share. .,. Insr�ct and copy partnerslup book
b. Admit another partner d. Ask dissoiution of the finn at the proper time . .

1 3 9. A pmtnership wlu<.;h comprjses all that the partners may acquire by the i r work or industry duri ng .the
existence of the partnership is
a. Universal partnership of pi'esent property c. J articular partnership

h Universal partnership of p•·ofits d. ( kneral partnership

l 4U. The fol l owi n g are the effects o t' unla'"1i.ll partne rship, ex ;ept
a. The profits shall be confiscated in favor of the government
b. The instruments or tools ai:1d proceeds of the crime :;;iali be forfeited in favor of the
government
c. The contri but.ion of the panners shall be confiscarea 111 favor or" the govemmeut . .
d. The contract is void ab init io anti the partnership neveli � xisted in the eyes of the law .
.
J4i. As regards a limited p3rtner, w!1ich of the followmg is 1.:crrect?
a. Ht is automatically an agent for th e partnership witt apparent atlthority to bind the limited partnershin
in a con tract
•

b. .He can not own limited pa rtne rsh ip interest in otht! competing liinited partnership
c. He h as no liability to cred�tors even ifhe takes part in the control of the b usiness as lon g as he is held
°
.

ollt as being a limited partner

d. He can co ntri bute money and/or propert y but not· services

142. Ab�;em any contrnry provisions in the agreement, under which of the following circumstani:::�s will a
limited partnership be dissolved? .
a. A limited partner dies and his estate is insolvent
b. •\ personal creditoz of a ge11eml partner obtains � jud gment against the general partner' s interest i n the
l i mited partnership
i\ generai parl ner retires ami all the remaining genera I partners do. not consent to continue
!imi ted partner assigns h i s partner sh i p interest to an outsi der and the purchaser become� a
'\
� substituted
limited partner
 B and C are partners con-. ributing
t,
serv i c s .
� F2tl.< JiJJ aI!C: P40, 0 00 respectively. The distJibution of
pSiJ,000 profit shall be
a. A = P20,000 � B P 2 0 00 0 C' = P40 .000
:). '\ = P 5 ,0 00 .
. .

c = ?50,000
=

B = P25.000 '.
,
c. A 7 P32 ,000 ; B =·Pl 6 000 :
. '
c :;; "P32.000
d. A. = P26,667 ,
B = P26,667 '., C P26,667
' =

144·. Using thl'.: preceding nwnber, if the P80,000 re resents n t assets, p ;

distribu tion shall be th;
a. A = P 20 ,000 ; B = P20,000 ; C = P40,000
b. A = P S,000 : B = P25,000 ; C = P50,000
c. A = P32,000 ; B P l 6,000 ; C = P32,000
cl. A � P26,66 7 ;
=

B = P26,667 ; C = P26,66 7

1 45. A, B and C are partners contributing service , P40,00') and P80,000 respectively. The distribution of
;
P6G,OOO loss shall be
•

a. A = P l5,000 ; B = P 1 5,000 ; C = P30,000

b. A = P20,000 ; B = P20,000 ; C = P20,000
c. A. = PO B = P20,000 ; C = P40,000
d. A = PO B = P30,000 ; C = P30,000

l46 .. Using the preceding number, if the P60,000 represems ne: assets, the distribution shall be
a. 1\ P l 5 ,000 ; B = P 1 5,000 ; C = P30.000
b. A = P20,000 ;
=

8 P20.00(.1 : C f'20.000
�
c. .\ :=; PO c P40 ,ooo· t l :4
=

B = P20,00lJ ;
=

d. A = P.O
=

B P30,000 ; = C = P30,000

147. A lim it ed partnernhip has A, as general partner, B, as limited partner, and C, as capitalist - industrial
partner contributing P50,000; PS0,000; and P50,000 and �ervices respectively. The partnership tailed and
after disposing all its assets to pay partnership debts only f' 30,000 remains. The distribution shall be? •

l3 P l 0 000 C Pl0,000
.
a. A = Pl 0,000
b. a = P I 5 ,000
= , =

A = P15,000 C = PO
c. A= P1 5,000 13 = PO C P l 5 ,00 0
d. A = Po
=

2
...
ts = P3o,ooo C = PO

148. He shall preside ai: all meeting�; of the directors or trust !es as well as of the stockholders or members,
•

unless the by-laws provide otbetwise :

a. Chairman of the board b.. President
.

d. Treas ure r
.
2
c. Secretan

149. Non-voting shares rnay vote, except

a. increase in capital sto ck b Merger c. Dissolution d. Management contract

1 50. Which of the follov.;ng statemem s is correct?

a. Treasury stock sold for les!: than their par or iss¥ed v •.1�1e are considered "watered stock" and as such
. .
•

23.
·

is prohibited by Jaw.
b. Five but not more than fif.een jundica! anu persons, majority of whom are residents of the
natural'
Phil� may form a private corporation
24. c. No par value shares of suck cannot be issue d by banks. trust companies , insurance cornpanie�, •

building and loan association and public utilities.

•

d. Membership in non-stock corporati on and nghts arisrng there from are personal and non-transferabl,e
an� therefore cannot be transferred even if prnvided i il the articles of incorporation or in t\}e by-laws. ·
25.
·
1 5 1 . This .grou.p of persons may not be the incorporator� of a cor·JO ation in the ; Phi ls.
a. 1 5 Japanese citizens wh o a1 e resident of Quezon Citv
b. l O Resident aliens and 5 non-resident alie�s
·

26.

c. l 0 Americans residing in the P hi l s and 5 Filipinos res iding in Australia

d. l5 Filipinos who are re sidents of USA •

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 ..

152. A corporation is deemed dissoived ·.

Ceased operation for at least 5 years· : ..

�.
<1
t e of
.

b. No commencement of business iransact ion 'vithin 2 years from issuance of c ertifiq1 ;

incorporati on
-

. .

c . A member of the board i s convicted of an offense , be .

C; Majority of the member� of the board are dead the
can
or
l53. Every corporation whose charter expires by its own Jirr itation, or annulled by forfeiture or otherwi se
,

whose corporat e existence for other purpo�s is tenni riared in ;my other manner shall nevetthel ess be

continued as a body corpora1e for 3 years after the ttme when it would have been dissotved for the
p urpose of the fol lo win g exce pt
a. Prosecuting and defencing suits by or against it JJid enabling n to settle and clo�e its affairs .ny
,

b. To dispose and c onv ey i ts property

c. To distri bute its assets
d. Continuing the busineS:> for which ir was estahlis.1ed.
154. Which of the following corpor:; le acts requires th� appro"al of Ll-1e majority of the �utstanding capital stoc�
or o f the members of the private corporation? . ·,.
a . T� in ve st corporate funds in another corpo rat:o n er business
b. To ad opt by laws
.

c. To .dissolve the corporation

d. To amend the articles of i11corporat1on

155. As a rule pre-incorporation subscription is irrevocable for a period of at least

a. 30 dqys b. 60 days c.' 6 months d. l year

1. 56. A, B, C, D and E are directors of a corporation'. Two days before the meeting of the board, wb.ere by a
un anim ous vote, a reso l uti on d�:claring a 50% stock divi a e nd was passed, A, B and C sold and trapsferred
all l'leir shar�s. The transfers were duly registered in tht: books of the corporation immediately after the
sale. fs the di viden d decl arati on legal ?
a. Y�s, A, B and C are sti l l qualified to sit a:. membc:rs of the board in hold--0ver capacity unti l their
successors shall have been ele cted and qualified.
b. No, at the time the resolution was passed, A, B and C were no longer qualified to sit as directors
since they an: no longer stockholders
c. Yes, unanimous vote means all directors approved the resolution
d. No, if the other �embers c .f tbe board were not informed of the transfers made

1 5 7. Whic� of the following is the disadvantage of forming a cor'porati�n? .•

a. The'free & ready transferability of ownership •

b. The shareholders are not li ;ilile for the debts of the business
c. Because of the power of succession,' the ex.isterict: of the cnrity is not affected by the personal
vicissitudes of the individual stockholde rs '

d. The s u bs ervience of minority stockholders to the " i shes of the maj ority subject only to e·quit ble a
restraints

158. Cash dividend as distinguished fr,)m stock di v idend

a. Corporate capital is increased
b.Concurrence of the stoc khol de rs is required
c.lnvolvcs disbursement to the stockholders of accumulated eami:Q.gs
d.Being part of corporate propertv, maybe reached by corporate credrtors

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- - -
 .

1..i is one �f the dire ctors or Delightful Corporation. Later, she sold all her shares to K. Subsequent!�, a
meeung of the board of directors was held and both J rnd K attended said meeting. each claiming t he right
to part ic ipate in the delibera t on of the board J comen .e d that she has the right to continue as di n:c:or �!r-::i'
th:: s toc kholder:: l:Ouid elect ne r successor. Un the oui�r haud, i\. aigued IP.ft having purchased aH of J ' s ,
shares �he has the right to take the latter's place in the l:-Oard. Which of the following is not eon-ect?
.
·

Both J and K are disqualified to sit a s directors in tt e Board of Di rectors

•
·
a.
b. J cannot qualify a s she di �.posed all the shares.
c. K cannot qualify as she must have to oe elected by the stockhol ders. •

d. K can qualify b e cause a stockholder as well as the heirs and assigns of

"
a
!
stockholder of � same
corporation has the right c.f succession
�
1 60. The articles of incorporation is required 10 state the m.me, nationalities and residence of perso� s . who �ha_li
ac·� as directors or trustees umil the first regular direc :ors or trnstees are duly elected and qualifi�d fh1s .

requirement is intended to provide a basis by which the SEC . could determine whether the articles of
•

incorporation has complied with the req uirement that

a. At l east majority of the directors or trustees are residents of the Phi ls
b. At least majority of the di ectors or trustees are citiz !ns of the "Phi ls
213 of the directors or trusLees are residents of the Pt.ils
r

c.
d. 2/3 of the directors or trustees are citizens of the Phi ls

l6 1 . At an annual meeting of :;tockholders, a resolutio1 1 was approved empowering the president

of the
p of
corporation to enter into a co:1tract with a N ew York f inn. Can t e v irtue
h res i de nt validly act by such
resolution? .
l"1 Answer - Ye�;, the ac tion cfthe ·stockholders W?S apprpyed during annual stockholders meet ing .

2nd Arlswer - No, the power ti > contract for and in of the corporation resides primarily n the bo�rd of.
behatf i
directors.
a. · T.rue , true l 1. True , false- ·c. False; true d. False, false

. laws on
1 62. If there are 9 members of the board and the by . ! vi de for the creation of an executive co m rnitte�, the
'
minimum number of its members is
a. 7 . b. 5 c. 4 • d. 3

163. The executive comm ittee shall act by

.•
a. unanimous vote b. majority vote c 2/3 vote d. 3,4 vote

1 64. In a meeting to only 9 out of 1 1 members of the board atten ded. How many '!Otes will oe
el ect the officers
needed to elect the President of the Corp.?
a. 9 b. 7 c. 6 d. 5
16:;. These powers cannot be e xerc i sed by the executive committee. except
a. To fill-up vacancy in the board
b. To distribute c ash dividend
c. To increase the minimum number of shares needed l :efore a shareholder may qualify to be <t member {)f
lhe board
•

. · . ! •t:•
d. To epter into contract for the supply of goods ne�aed by the corporation

166. Sh are s of stock cannot be issued if the consideration re<: eived is (are)
a. money b. property c. previpus services rendered d. promissory notes

167. He must be a resident citizen

2 a. president b. secretary c. · :reasurer d. chairman of the board
1-68. He must be a member of the board
2, a. president b. secretary c. · reasurer d. i ncorporator

169. He cannot be the secretary of t.he corporation

a. president b. treasurer c. chainna1°, of the board d. inc"orporator
170 Must be a natural person
·

a. stockholder b. mbscriber c. mcorporator d. highest bidder

PW-'BL-0-12 19
 •. -• .

.
.

1 7 l. . Should not be more than fiftet:n ( 1 5)

.

:i. stockholder b. subscriber c incorporators

1 72. Co rporate acts performed outstde of its express incidental or impli ed powers
.

·
a. 4ltra-vires acts b. illegal acts t: . intra-vires acts d. legal acts
173. The board of directors or tru stees may amend or repeat me by-laws or adopt new by-laws by
a. rrlajority vote b. unanimous v ote c. 2/3 vote d. 3/.i vote

l74. The srockho lder� or members may delegate to the board of directors or trustee s the power to. amend o r
.

repeal the by-laws or adopt new by-laws b y

a. majority vote: b. unanimous vote c. 2/3 vote d. .34 vote
•

175. Regular meetings of stockholders or members shall be h{ Id

a. monthly b. quarterly c. s emi annual - d. annually

l 76. Unless the by-law s prov ide oth�rwise regular meetings m the board of di rectors or trhstees shall he held
a. monthly b. quarte rly
'

c. weekly d. annually

l 77'. Finr Statement -- Treasury shares shall have no voting rights as l ong as s�cK��ock remain s in treasury.
Second Statement .:... S hares of stock shall not be issued i n exchange for futme services.
a. true, true b. tr .1e, false c. H:lse. true d. false, false

178. Except as a condition in a loan agreement, the voting trlli l agreement shall not exceed
a. 6 m onth s b. l ·1ear c. .3 years d. 5 year:s

179. A bill of exchange as di stinguished from a check

a. Tne drawee is always a bank
b. It is al ways payable on demand
c. The death of the drawer, iflmown to the bank does not revoke the authority of the drawee to pay
d. It is drawn on a deposit or ch·�cking accol!nt
! ·

1 80. The following are 1imctions of a negotiable instrument. ch· lose t.he exception
a. It is a substi tute for money
b. It increases credit circulation : .

c. It increases purchasing power in circulation

d . It c-x1inguishes obligations if its delivery is accepted by the creditor .

1 8 1 . A promi:>sory note reads - .£ pron use t�> pay B or ordl!r eigh!)' ze�o pesos only (P800.00), Sgd A.
.
.

'· .
1be amount due is
·

a. P80.00 t.. P800.00 c. zerv d. not de termi �abie�

'

L82. A promissory note reads I pro m ise to pay B or order one hundred pesos only (P200.00). S gd A a4d c
Which of the following is correc·:?
-

a. E ither A or C can be required to pay P 100. 00

. b. Either A or C can be requi red to pay P200.00 . .
c. The·promissory note is not negotiable because the sum payable is not certain in money.
d A and C can be required to pay P l 00.00 each
' •

.A., a minor iss ued a negotiable promissory note payable to the order of B, also a minor. Later B entlorsed
the note to C aud C to D and D tc- E, and E to F. \Vhi ch of t he foll owing is correct?
n.A cannot q uesti on the incapaci ry of the payee
b. ff C made a qualified indorsement to D, C is not l iab le t c 1 F
c. Thi: note is not negot iabl e because the maker and the pa�'ee are both minors
J A! I rndorsers arc Liablt! to F, if F is a hold.er in due COU!5• :

µerson who for val ue negotiate:; or transfers a document ·)f title by ind orsem ent or delivery warrants the
llo,-.· t!lg , ext;ept
Tl ,,ir ·hr: documwt is genuine:
ha( tiryor parti es have the capacity .
at he has a legai right to neJotiate or transfer it .
· he has no knowledge of any fact whi�h would impm the validity
. or worth of the docume
. .

� _ _ _ _ _
 O n Octobe.r 1 , is sued bills i n set with 2 pans.to B. On October 1 5, B indo�ed the first P� to C.:
:�?10,_A •

who ne got i ated 1t to D. On ( lctober 3 0 , B indorse d th1 : seco nd part to E who negotiated it to r .. Whi ch 01
the following is not correct?
•

a. D 1s the true own er, hence; he can require me drawe e w pay him
h. B and C are li abie to D
c. B and E are liable to F . .
d. B is liable to D and F . '

1 86 . A complete but undelivered promissory note reads: I pmmise to pay P or bearer P 1 00,000. Sgd M. P.took
the note from M's drawer and delivered it to' A who lit ter dehvereti it to B who likewise delivered it to.c.
A; a resu lt,
a. C can collect from P if M aisbonors the note
b. P is liable to C eve n if noti·�e of dishonor is not giver by C to P
c. P ' � warranty e xtends in
fav or of A on ly
d. C should give a notice of dishonor to P to make )I liaole. to him
\
\ 1 87. U:;ing the preceding numb�r. but p made a quali.:led indorsement but A and B made a special
j
I indorsemeoJs, in case M dishonors the note, Which of me following is correct?
a. P is liable to C for breach of warrantv
b. A and B, but not P are li able to C
·

c. P is liable to A only
d. It is only from B that C can recover

l 88. A hol der in due course is a hol der who has taken the in strume nt wider the following conditions, except
a. That the instrument is genuine and in all respect wha.t ir purports to be
b. That he became the holder c)f it before ir was overdut: , and without noticr; that it has been previously
•

. . ··=·
dishonored, if such was a fact
.
· ·
.

c. Th at he took it in go od faitb and for value

d. That at the time it was ne goti ate d tG him, he had no n )tice of any infinnity in the instrument or defect
in the title of the person negotiati ng it •

1 89. Which of the following is a retl defense?

a. Want of delivery of an incomplete instrument
b. Total absence of consideration
c. Fraud in inducement
d. Material altemtion
2
l 90. Which of the fo ll owi ng is a personal defense?
a. Insertion of a wrong date where the instrument is Wld.ned
b. Fraud in factwn
c. Forgery of a signature
d The instrwnent is incomplete and undelivered

1 9 1 . Where a bill payaole after sigb1 is accepted for honor , it!; matunty is calculated from the date of
I

2:
The acceptance for honor .
•

a.
.
b. The noting for non - accep1:ance • I
c. The presentment for acceptance

<l. The receipt of notice of dishonor from the notary pllblic

. .
192 . Ordinary' acceptance as distinguished from acceptance fo r honor
a. Protest is a prerequisite
b. Consent of the holder is necessary
c. I n volves the entire instrument
d. The liability of the acceptor is secondary
. .
193. The bank is both the drawer anJ the drawee of the
check
a. Cashier's check c. Crossed check
b . Certified check
d. Post dated check

l _ _ _ _ _
- -- -- -- -- - - - - -
 • • '!'..._
.·

1
l
194. Where a person ' s signature appearing on a negotiable in:;trument will make him liable thereon
. c!. When a person signs an undelivered and i ncomp lett instrument
·

b. ln case of an indorsement of an instrun:ient by an iru ;mt or other incapacitated persons

c . When a person signs in a irade or asswned name
d. In case of a signature by an authorized agent indicating that he signs as an agent and discl.osing his
pri nci pal
,

195. Which of the following is not correct? Where a negotiable promissory note bas been issued for an illegal
purpose
a. The note as a contract is void .
b. The payee may h ave no cause of action against the rnak1:r
c. No legal effects mav flow therefrom considerin!.! tha"L tllt · contract is void
d . Once negotiated, the l iability in favor of a hold;r in due 'course may ensue against the maker
.
.

196. The crossing of a chec k wher1� the words wrinen betw !en the two parallel lines are "and Co." or "for
pay�e's account only" is
a. general b. special c. quaiifie1 I d. restri cti ve . .

name of a bank or , business institution is wr,itten between

' I

I 97. The cros sing of a check where the the �o

paraliel lines, which means tbat the drawee should pay orily wj.th the intervention of.that company is
a. general b. spec.al G. qualified d. restrictive

198. Which of the following is not a 1 equirement for the suffic1:!ncy of presentment for payment?
a. It mu st be made by the holder or by some person authori1 ed to receive payment on his behalf
b. It must be made ac a reasonable hour on a busin("Ss day
c . The re must be a previ ous notict: of di sho no r w the parrie� secondarily liable except if notice is ex.�used '
d. It must be made to the person primarily l iable on the nstrument or if he is abs�nt or inaccessible, to
any person found at rhe place where the presentment is ffi<�de
·

199. The r·�quiremebts bdore paymen t can be considered as pa)ment i n due cours are as follows; except �
u. Payment must be made in good faith and without notice that the title of the holder is defective
h. Pa y ment made by the indorser where the instrument wa.; previously accepted for the honor of such
indorser
be made to the h older or any authorized r :!presentative
c:. Payment must
d. The payment is made at or afu�r the maturity of the instr JITI.ent

200. If a negotiable promissory note not presemed for payme 1t and presem�ent is not �xcused, whid1 of the
· · � •1:11 '
i:· •

following is correct?
·
· . .

a. Only the maker is discharged

b. Oniy the in dorser i s di scharge d
c;. Both the maker and indorser are discharged
d. Neither the maker nor the indorser i s discharged bee aus.:. the holder can still give notice of disho�or
201. If notice by or on be half of the holder, who will t· e benefited by such notice o f i s hon or?
was given d
Answer 1 - All subsequent holders
Answer 2 - All prior parties who bave a right of recourse against the party to whom notice is given
a. Both answers are correct
b. Both answers are not correct
c. Onl )' answer J is correct
d.. Only answer 2 is correct

Where the i nstrumem bas been disnonored in the hands of a1'1 agent , which of the following is not correct?�
·

a. The agent may give notice to the parties liable thereon

·

. If the agent gives n o t i ce to his principal , he must do so W· t��. .

t
.

the sam� ime as he �:vere the holder I�

.

'l'he pri nci pal may also give nottce within the same ti me z s if 1t were �h s h nored m hands � �u�
e prmcipal, upon the receipt of notice from bis agent has the same ime for givmg nonce a:; �f the,
.

..
t
liau been an independent holder .
.
. ,

' .•

- - - - - �
- - - -· - -
- - - - - - - - - - - �
- - --
- - - - - -
- - - - - -
 .
[C! whom n otice or dishonor sh.ould be giv�n ·:
,.\:nswcr l - Where the partie:; to be n otified � :·.: panne1 s. notice to any one partner is notice to the firm,
even though there has been dissolution
Auswer 2 - Notice to persom: jointly liable who are par tners must be given to each of them unh!Ss one of
them has authotity to receive such notice for the other�:
Both answers are correct
•

i
< .

b. Both answers are not correct

c. Only answer l is correct
d. Only answer 2 i s correct

204. Notic e of dishonor is not required to be given to the drav1t!r in the following cases, except
a. Where the drawer i s the agent of the drawee and the drawee dishonored the instrument
.v ere the drawer closed hi:; account with the drawee bank
b. ·..n
c. Where the drawee is a minor
d. Where the bill was renegoti.rted to the payee

\
� 205. A issued a negotiable bill of exGhange payable Lu the ord :r of B. S ubs eq ue nt indorsement are: B ;o D, D
to E and E to F. When F presented the instrumem for aci;eptance, the drawee C dishonored the
.
\i F gave notice of dishonor to D . Later F indorsed the biU to G who·Jikewise indorsed the bill to H, a holder
instrument
\ in due course. If I he bill is aga1 n dishonored by non - ac 1_: eptance in hands
'
the ofH, whjch of the ·

\ following is correct?
l a. D, F and G are liable to H even if notices of dishono � are not given to them
\
I t ofE, F, G and H
b. The notice previously given to D inures to the benei
i
i E if H n�quired F to pay him
c. F can collect from
d. A, B and E were previ ou sl v discharged henc�, H sh..: uid gi\'e notice of dishonor to G and E
I
· ·

. '
206. He is a party on the face of the hill and yet he is not yet li. tble
a. Drawer b. Drawee .c. Acceptor
• d. lndorser

21 207. M \�;sud a negotiable promissory note to the order of 1 1 P indorsed and delivered the note to A. A, .iii
turn indorsed and delivered the note to B and B, iaier r.1:gotiated the note to C. On date, C not
due did
'
pres ent the note to M for paym�nt. Later, C wem ro cot rt and sued M and the indorsers. Wili the c�c!
21 against tpem prosper?
a. Yes, because M as maker is primarily liable and the i.'1do:sers are secondarily liable
,.
.�
II

b. No, because C should first make a presentment for paym!nt to M

c. Yes, in so far as M is concerned but no in so far as the in.. iorsers are concerned
22 d. No, in so far as M is concerned but yes in so far as the in lorsers are concerned

208. Jn payment of merchandise pur0hased by A from B; A made a promissory note which reads: "l promise
to pay B Pl 00,000". Sgd. A B indorsed and delivered the note to C. Later, Y stole the note and indorsed
and delivered it to D, who acquii·ed it in good faith. Whe;1 D presented the note to A, A paid the note in
good faith. As a result
' a. The obligation of A is extinguished
b. C s ho u l d collect from 13
?"
_.),.

c. C cn n collect from A and 1f A \I ill nor pay, C ca1: rnlkc1 :r.:.m B

d. C can collect from A but not from B
I

24 · \
'
209. Using the preceding number, bu� the promissory note rea.is "I promise to pay B or order P l 00,000. Sgd.
A"
\ The obligation of A is extinguished
I a.
\ b. C should collect from B
25 . (
c. C can col l ect from A and if A w ill not pay, C can collect
I
t rom B
I d. C can collect from A but not from B
i
?£
-<l. 1
2 1 0 . Using the preceding number, bl1t the promissory note
re.ads "I promise to pay B or bearer P lO O 000'�.
4 Sgd. A. ' ' •

�l a. The obligation of A is extinguished

\ b. C should collect from B

'

c. � can collect from A and

if A w II not pay, C can collect t'·om B
d. C can collect from A but
not from B •

iI
_P....lll...lU-ll- l.'.L ---1"l _
- -� - - - - - - - - - -
-
 . .

•
I

211 note payable to bc:ar:r. He delivers the note to B. B indorse d the · nbte
A i.)sued a negotiable promiss,)ry
·
especially to C, then C negotiate:; the note by de very to r: . Wfuch of .the foliowing is not correct?
F .
a. D can enforce the note against C c. D can rnforce the note agamst A
b. D can enforce the note against B d. C can � nforce the note aga inst B
•1· �
' '
'! ! 2 12 . This is not a requisite of a valid acceptance for h9nor .
a. There must be consent of the bolder

:: I
!I b. The ac ceptor for honor is party already liable oo the 'insoument
c. The acceptance for honor mu si be in writing and signed by the acceptor for honor
d. The bill must have been previ ously protested for non-acceptance or for better security
ts.:
I\
2 1 3 . M i ssued to P, accommodated party, a negotiable pr.omis sory note for P l 0,000 . P endorsed it to A, A to
,I B, B to C. Which one of the folk•wing is incorrect?
I a. M can collect from P, if M will pay C
b. P may directly pa:1 C
c�. Between M and P. M is secondarily li abl e while P is prin.;ipally liable
d. P c:m collect from M, if P wi ll ;Jay C
.,

!i negotiable promis:,ory nme m favor o( P payable on Dec.' 2�!:"20 1 0 with th,e fol lowi ng
2 1 4 . . vf 111.>i:es
:11 I. ,,
1 54 . . successive jndorsements P to A, A to B and B to C. . On :he due date, M is paying C, but C eXtend!; the .
a
•

"

payment up to Dec. 25, 20 l l. Whi ch of the following is not correct?

.1
ii a. C may still enforce the instrument agai nst M.
b. ffM becomes insolvent on December 25, 201 1, P, A, and B are discharged from their obligation
c. If the. indorsers consented to the extension of time anc M beco�g insolvent on Dec 25, 20 1 1 ; the
I ·
·'
·

indorsers are still liable.

d. If be fore Dec 25, 20 1 1, C cancels the signature of P as i ndorser, P, A, B and the instrumtmt are
discharged.
a. .

2 1 5. This i:; not negotiable

1 56. A, :
I I a. I promise to pay to th e order of myself P l 0,000 si gned by A.., the maker
I Pay to the order of the Commissmner of lnteinal Revenue P l0,000 tp ABC bank. S gd . A
un ,
-
�if
: b.
c. 1 promise to pay to order P I 0,001 l Sgd A
aJli

d. Pay t� the order of X, Y and Z, f ' l0,000. To B. Sgd A

,,
I
I
•I

2 l 6. Omiss10ns that do not affect the negotiability of an instrume nt.. except

�·
1
1
a. It is not dated
b. Does not specify tile value giveu
':.. Doc:; not specify the place whe1e it is drawn
• I
d. Doe�; no t name the payee where the instrument is payable
.
id order i

157. w
; 2 l 7 Which of the following instrumems i s not negotia.ble for th:: rea!ion fua.t the instrument is not payable at. a
! determinable future rime't
.

.
30 days after demand, drawer A directs drawee B to pay C or ora er P l 0,000.
b· '
a.

i.J. 10 days after the death o f R, I promise to pa y to the order •JfB P l0,000. Sgd. Q
c.

c. 1 0 days :rter A passesthe cP� b1oard E:am. I pr�mi se to :lay to the order of B P l0,000. Sgd. <:;
n or b c1ore Fe ruary 2 , 20 1 -, prom.Jse to pay A or ord !r P l 0,000. Sgd B .
d. 0 b 8 .
d.
.

� obta ins the

· signature of Y for autograph ?urp�s�. X wiites. a negotiable promissory note above Y's
.
Z who 1s a ho lder m due course. What kind of defense can
y
.
s1g�tu re The note was validly negotiated to
:
avail against Z? .
:.i. Perso naJ defense . b. Real defense c. Eguita ble defense d. Qualified defense

�:�19. A issued a promissory n�te t o the urder o f B fo r P l0,000 p ayab le on Sept. 30, 20 1 0 in payment o
f � TV
set sol d by B to A B faded to deliver the TV set to A and instead transferred the note to
1·1 ' Wh ich
. . c .:
ior vaI·ue
but WJ utout mdorsem ent .
• 1
·.i .
0.1 the following is correct?

C is d�emed a ho l der for value when B transferred the n<·te to him

C beco mes � holder in due course· when B indorsed the nott: to C on Oct. 9, 201 O.
c hr.!' no nght to compel B to make tile proper indorsement to him · � •1:•

' can not C?llect from A because of A's defense of

·

lac;k of ronsideration
 M issue s a promissory note payable to P or bearer. lf 9 indorses the note to A, whi�h of the folloWing is · ., � .

correct?
•

:i. i\ must also indorse to negc1tiate the note

')I o. lf A merely m:gotiates by d;:livery 10 B. P is liable t0 8 because of his indorsement to A

) c. If A merely nt�gotiates by ddivery to B, B becom
es 11 holder even if P indorsed it to A . .
The instrument is conv ertect to an order instrument.
•

1
u. •
• '

2� I . VI/ hi ch of the following statem ents is not correct?

•
·
.
a. Where the instrument is payable on demapd and it , i s negotiated after an unreasonable length of·time
after.its issue. the holder is ·:1ot deemed a hoider in du:: course.
b. A holder in du e course is a .1older for va l ue
c. A hol der for value may not be a hol der m due co urse ·

J. An accommodation party 1s l iable .to holdi::r for. value only if such holder at the time. of takin g the ·

i nstrum ent is not aware that he is only an accomm.o da tion party.

.

222. Negotiation as distinguished f rom assignme nt

a. Refors generally to an ordinary c ontract c Trans feree is a holder
b. Does not warrant the solvency of the prior parties d. Subject to both real and person al defen ses

223. Which of the following is a negotiable bill of exchange'!

a. Pay to the order ofR the sum ofP 20,000. Sgd. S ·
b. Pay to the order of R the swn of P 20,000 S gd. S
To A or in her absen c e to M
.... Pay to the order the sum of J> 20,000. Sgd. S.
To A or M
J. i'ay to the order of R or J lhe sum of P 20,000
· Sgd. S. To A and M

224. A issued a negotiable promissory note to the order ol' B for P 10,000 payable in 30 days after date .
Late:- B, en dors ed the note to C. Th en · X stole th1:. note from C, forged the signature of C and
negotiated it to D, and D to E, E to F, the holdt:r. ( )n maturity of tbe note, which of the: following
statements is not correct? ·
a. F can collect from either D or E because the ir .;ignatures are genuine and the note is. operative
against them
b. f can collect from A because A can not put up for;�ery as his defense as his signature is genui ne
. c. F can not collect from C b-.�cause it was C's signarure which was forged
d. F ca n not collect from B b1�ca us e B is, a party prio r to the forgery

225. Which is not com� c t? The acceptor by acce pting a negot iable instrument
<t. Admits the capacity of the payee to endorse
b. Admits the genuineness of the drawer's signature
c. Admits the genu inen ess of the endorser' s si gnature
d. Admits that he will pay it ac.cording to the tenor of h is acceptance

22t. .. 1 promise to pay B or order P l00,900, one month after B's father die s. Sgd. A. 'fhe instrument rs . .
a. 1\iegqtiable from the time B':; father dies c. Non·ne-gbtiable because payment is iii.definite
b. S ubj ect to a condition d. Payab l.! at a determinable future time

227. What are the effects of indorsement after matuiitv?

First Answer - There i s assigmnent and not negotiation
Second Answer - The h ol der ca nnot be deemed a holder 1 n due course
a. True, true b. True, false c. f3Jse . rrue d. False, false
.
228. A pro issory note reads ''. I pro ise to pay � or •order P 100,000.
_ Sgd A." Then B made a
mdorsement to C. On matunty, A dishonors the instrumc!�t due to his insolvenc
� � qualifleci.
y, As a result.
A.) C can collect from B, if he is a holder in ciue course
B.) C can collect from B, regardless of whether 11r not he is a h ol der in due course
C.) C cannot enforce the instrument against B
a. A only b. B only c. C only d . A and B
 ry that his signaturi!
229. Using the preced ing number, ;f A dishonors the insr.ru nent aue tQ forge ,
forgeci by B, the eftect is
if he is a ho lder in du� pour:;e
A.) C can collect from B,
. B.) C can collect from B, even if he is not a holder in due course
C.) C can collect from B, regard le ss of whethe i or npt he is a holder in due course
a. A only b. B only , c. C only d. A, B and C :
·

.
nt ; iderati on
230 . A issues a bill payable to the order of B. Later B witho endorsing the bill transfers for a co n� •

said bill to C. The following, except one, are the valid effeds of the transfer, The exception is
a. C becomes a holder
b. C ac uires the right to have the !ndorsement of B
q
c. The tr:ansfer vests in C such title as B had thereon
d. The bill is merely assigned and not negotiated

23 1 . Where indorsement is conditional, may the maker of < . negotiable promissory make payment
an
although

the condition has nor been fulfilled?

a. Yes, he may disregard the condition without incurring any liability ·

·
b . Yes, he may disrngard the condition but he becomes liatle i f the endorsee fails to fulfill the condition
c. No, the qualified indorsement becomes part of the contrnct
d. No. the person who received payment will hold the f<r0ceeds subj ect to the right of the conditional
:<
mdorser.

.231. J\t1 issues a promisso ry note payal>le ro P or bearer. Wb.tch 0f the followjng is n&:torrect?
a. If indor�ed hy P t•.) A and ,.;, abv iudorscs it to B, B i.nay ·1egotiate the note to C by delivery
b. If i11dorsed by P to A and A alst> indorses it to B , P is ii<nle to A and B
·

c. lf iudorsed by P to A and A abo indorses iJ to B, and B :1egotiates the note to C by delivery. A is liable
to E and C.
d.
.
If P negotiates the note to A by delivery and A i n dor� e s i t to B , B may negotiate the note to c•by
delivery ·

.s1 233. Which of th e followmg is not correct?

a. Where the instrument is negotiated back lo a nrior pany, all intervening indorsements are no1 ne-cessary
to the holder ' s titl t : .
· b. Where the instrument is origmally payable to order, the holder may not strike out the ,payee's ··
•

indorsement.
c. The indorser whose indorsement is struck out and all i ndors ers are thereby relieved from liability on the
instrument
·

d. 'Ifie _holder may at anytime strib out an indors�ment whi"h is not necessary to his title

34. A bill cf exchange as di stin gui she c! from a promissory note

a. The ont issuing the instrument is primarily liable
.
b. Accemance of the instrument i..<> r 1ot reqwred .
c. Origi;1al parties are the maker, and the· payee or bearer · '

d. Contains ·an unconditional order

.
3 5 . A issuea a negotiable promissory note payable to· bearer. f e delivers the note to B. B indorsed the note
A especi ally to C, and then C negotiates the note by delivery to ). Which of the following ·is correct? .
a. D can l!oforce the note against C and B c. D can enfo rce the no te against A and C
b. D can 1:nforce the note against B and A d. C �an enfo�ce the note against B and D
. q .
·�� : 36. �:: sued promissory note payab1e t o B o r order �?r Pl O,C10Cr for 10 bottles of whisky sold b y B t o A
.-�. L B
�egotiated
a

the note to C. S ubsequently, A discovered that only 5 bottles of whisky genuine.

are
.1
As a resuit
� can enforce
a.
the note against A for Pl 0,000 regardless of whether C is holder in due course or not.
.
b. C:. cannot
enforce the note aoainst A for P l 0 000 even if he is a holder i n due course
'
L can en:Ji
c·
n11t
orce 0
the note against A onlvJ for P5 ' 000 regardle ;;s of whether he is a holder m due cource
•
.

. 1
· or

C can enf{) . .
fee the note against A unly fo r P 5.000 if he 1s not a holder m due course.
 �.#;>:�.��.
e
f !.,
f, 1nakes a negotiable note to bearer and delivers i c :o B for safokeeping. The note is negotiated by''
I

.
.

�. ::1:1 A rl:fuse t�l pay C on the ground that tnt; nOLc: · 'as onginally delivered to
.
B for a special P",.......,
' .,
on:" ·
:i ' '.: ,, :\ can pr•)Ve that he de-livered the msrrument to n only for a special purpose

b. : :•, . •.vnere tbe instmment i� in the hands of 3liV Jmi111; ; a valid uelivery thereof by all parties prior 10 h.J.:n
·
;.., .. :. n.1 make tl1em liable tu tum is conclusively prest:med.
• · ! •1:4

c. Ye:-;, ·because B ne gotiated t he note without authc,ri��·

J. :\l o .. if C is a nc>lder in due course
.

· 2J � . A m:.ide a negotiable promissory note in fovor of B or order who negotiated it to C under the 'following
indc:rsernents. "P�y to C after passmg the CP /\ exam rn�tion in October 20 1 1 " . C p�esented it to• A for
payment and it was duly paid, ( · di d not pass tht: CPA e>:< minat!On. Which of the following is conect?
a. The promissory note is not negotiable because oi tb1: 1 : ondltion imposed.
b. The promissory note becomes void because the cond1' ion was not satisfied.
c. A had no right to pay C and. therefore can � compel l !d to pay again
d. A may d isregard the co nditi . m and make pay r:i ent whi :ther the condition is fulfille� or not.

2�w. When the i nstrume nt is c omplete but unde liver:!d, de!i1 :ry is pre�urned to have been made in favor of tl1e
holder , the presumption is
.i. Con.elusive whether holder in due course or for value •

b. Prima-facie whether holder _ n due cuurse 01; loi valut:

c. Conclusive if hol der for value and prima iac il! if ho id� r in due course
d. Prima-facie if ho lder for value and concl usi \'-;- if hold1:� in due course

240. This is
. .
a personal defenst
Absqlute defense b. liquitable detense Rc�l defense
.
· c. d. National defense
a.

24 1 . Tht following are functions of a negotiable ins!rument. r, ·hooSe the �x ception

a.It increases credit circu lation . c. As legal tenoc:.
b.As substi tute for money d. It in cre ases pu:<.:hasing power in circulation

242. Which of the following does nut discharge a negotiable 11 1strument?

hoL er
·
a. Intentional cancel lation of the instrument by the
b. Payment by the party primar i ly Hable to hold�r or fll s c. utiiorized representative?
c. Payment by maker of a promissory note before maturi1 y date
d. Vo luntary surrender of the instrument by the h olde r L0 the maker without collecting

24:: · A btli of excha nge to which document is attacheJ wfJ,cn ·, >resentment for payment or acceptance 1 s made
a. Trade acceptance c. Clean bill of exchange

b. Bank acceptance d. Docurr. entary bill of exchange

244. A transfer of negotiable instrument where the holde.1 of the instrument dies and his title thereto 13•
transferred to his heirs or personal representative i:;
a. B,, assignment b. By nego1 1ation t: th up�·r uion of law d. By accomodation ·
! , , •• • •

245. The effects of a forged signatm-e or one made· witha�t all�hority of the person whose
°
si gnature it pm
to be, except
;ports .

a. Toe instrument is wholly inoperative

• .

b. No righ t to retain the i.nstrum;!nt

c. No right to gi ve a discharge rnerefore
d. No right to enforce payment 1 hrough or under �u,;h sig-:
a!ure Gan be required

246. The writing_ of the name of the indorser on the

·e�1dence of his transaction of the title rn rt, or of h1s c ed �ereto
instru:nent itsel-f or upon a paper atta .h
m
·

b. Fo£gery
assuri.r.g its payment or both.
a. Allonge c. Signature by procunn.
•.>n d. Indorsement

247 lndorsem ent made by a person not ot

a party to u1e instrument, who places therem hi
m blank before delivery
·.
herwise ·
. ·

• s signa
ture .

a. Blan k b. Sp;!ciai c. Facuitai.ive d. Irregular

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 .
..., . .. . . ...

248. Indorsement where the indorst:r enlarges his liability by .va1ving the usual demand and notice of dishonor
a Qualified b. Facultative c. f ·.estrictive d. Conditional

::: 4S. A ' .vno has a current account tn a local bank employs B• as a b ookkeeper . nile in bis empl oy B forge�
.

. . · .m.• .
w
A's signature to a check which finally finds its wa"'j to t he bank� the bank pays the check and debtis A'<;,
account with the amount appeanng on the check. A objec :s to the action of the bank and files a suit against
the hank for the recoverv of the amount· of the checl: debited to his account. The bank sets up a
defense that A has been ne li gent in having permitted B tc have access to his papers. In whose favor s ould
g �
the j udgment be rendered?
a.. iudgment should be rendered in favor of the bank. / \ ' s negligence in hiring B and aHowing to have
access to the check was the proximate cause of the act
b. Judgment should be renderec i n favor of A When a si gnature is forged, it is wholly inoperative, and po
right to retain the instrument, or to enforce payment the reof against any pa rty thereto.
c. Judgment should be modifieci that i s A may claim only on-half of the amount of the check
d. Against A, but he can go afte:· B, the guilty pany.

250. Which of the following is a restrictive endorsement, pay 10 J'>

a. In lrust for E, Sgd. M t At his own risks. S gd. E
b. If he passes the CPA examination. Sgd. E . c. Notice of dishonor waived. Sgd. E

251. Which of the following instrume nt8 is negotiable? .

a. Pav to bearer, D P 1 0,000. Rei mburse yourself out of th1 : rental of my house in Mflnila.
. .

To B. ::i gd. E •

. ho �� � in Manila.
. l o.D P 10,000 or his order out �f the rental of rhv
b . .Pav
To B. S gd. E.
c. Pay mD Pl 0,000 and reimbur..;e; y0urself out Qf the renr.11 ofiny howse in Mani la.
To B. �;gd. E.
d. Pay to the order o f D P 1 0,00C . Reimburse yourself o ut of the rental of my house in Manila.
To B. Sgd. E.

252. This is negotiation as distinguished from assignment

.

a. The transforee is subject to both real and person�! deiensi�s.

b. The transferor does not warrant the solvency of prior part ies.
c. The transferee may acquire a tit le better than that of the prior party
d. The transferor is liable even without notice of dishonor

253. An al teration committed by a stranger to a negotiable instrument is

a. polzci tac ion b. spoliation c. opt: on contract d. material alteration

254. Tbis is nor a restrictive indorsemellt

a. Pay lo A for collection c. Pay to A at his own risk
b. Pay to A only d. Pay 1 o A in ti:ust for B

55. Which of tbe following is not negotiable?

a. Pay to B ororder P l 0,000 on or b·�fore December 3 1 ,
20 12. Sgd. A. To C
. Sgd. L \.. To C.
b. Pay to B or order P l 0,000 notice of dishonor waived .
c. J promise to pay B or order P l 0,000 or to dehv e r two horse. ; at the opuon of the holder. Sgd. A
.

d . Pay or order P I0,000. Sgd. J.

to B
The End!!
Goodluck!

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 MAY 2014

pRE W,E EK BUSINESS LAW

. '

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