1 pts

Where an instrument is drawn or indorsed to a person as “cashier” or other fiscal officer of a bank or
corporation, it is deemed prima facie to be payable to the bank or corporation of which he is such officer.
Who must negotiate the instrument for the negotiation to be valid under Act No. 2031?
It may be negotiated by the indorsement of the bank or corporation
It may be negotiated by the indorsement of such officer of the bank or corporation
Either A or B
Neither A nor B

1 pts
A made a promissory note payable to the order B. A delivered it to B who negotiated it to C. C indorsed
the note to D who is 16 years old. D indorsed it to E who later indorsed it to F, the holder. F presented the
note to A who dishonored the instrument. Which is correct? `
F can hold B and C liable but not D and E
F can hold D and E liable but not B and C
D’s indorsement passes title to E and F making D liable as indorser
F can hold all indorsers liable except D

1 pts
Which of the following persons whose signature appears in a negotiable instrument is liable thereon?
A person whose signature is merely forged by another person
A person who signed in behalf of another person indicating that he is only signing as an agent and
disclosing his principal
A person whose signature appears in a sheet of paper intended merely as an autograph
A person who signs in a trade or assumed name

1 pts
Which of the following statements is/are correct?
The person to whom ante-dated or post-dated instrument is delivered acquires title thereto as of the date
of delivery.
The insertion of a wrong date does not avoid the instrument in the hands of a subsequent holder in due
course; but as to him, the date is inserted is to be regarded as the true date
Both A and B
Neither A nor B

1 pts
Which of the following is not negotiable under the negotiable instruments law?
Pay to A or order P20,000. (Sgd. B); To: C- Accepted and payable 60 days from today
Pay to the order of D P20, 000 (Sgd. E); To F-Accepted for P10, 000
Pay to G or order P20, 000 (Sgd. H);To I-Accepted if G tops the 2017 CPA board exams
Pay to J P10,000, 30 days after sight (Sgd. K); To L-Accepted payable on Oct 27, 2016

1 pts
One is not negotiable ___________________.
A promises to pay to the order of B P1,000 with 12% interest thereon where the period from which
interest is to be counted is not specified
A promises to pay to the order of B P1,000 in four monthly installments beginning June 12, 2016 with a
provision that if A defaults in the payment of any installment, the entire balance including the unpaid
installment shall become due and demandable
A promises to pay to the order of B the sum of US$1,000 payable in pesos at the rate of exchange
prevailing on January 1, 2018
A promises to pay to the order of B P1,000 with an agreement to pay attorneys fees and costs of
collection.

1 pts
In which of the following instances is a holder still considered to be in due course even to a limited or
partial extent?
Where an instrument payable on demand is negotiated to him on an unreasonable length of time after its
issue
When the holder obtained the instrument, or any signature thereto, by fraud, duress, or force and fear, or
other unlawful means, or for an illegal consideration, or when he negotiates it in breach of faith, or under
such circumstances as amount to a fraud
When the holder has actual knowledge of the infirmity or defect, or knowledge of such facts that his action
in taking the instrument amounted to bad faith
Where the transferee receives notice of any infirmity in the instrument or defect in the title of the person
negotiating the same before he has paid the full amount agreed to be paid therefore, he will be deemed a
holder in due course only to the extent of the amount therefore paid by him

1 pts
What is the extent of warranty of a person negotiating an instrument by mere delivery?
It extends in favor of no holder other than the immediate transferee
It extends to all holders in due course
It extends to any holder
It extends to all indorsees

1 pts
A makes a note payable to the order of B. The note is indorsed successively by B to C, C to D, D to E,
and E to F, the present holder. Suppose the note is dishonored in the hands of F, which of the following is
correct?
If F gives notice only to D, the notice operates also to E, a party subsequent to D
If D after having been given notice by F, gives notice to E, the effect would make E still liable to the
instrument
If F gives notice to E, E may notify B, C and D
If F gives notice to D, the notice operates as a notice to B and C

1 pts
What is the extent of warranty of a person negotiating an instrument by qualified indorsement or warranty
of a qualified indorser?
It extends in favor of no holder other than the immediate transferee
It extends to all holders in due course
It extends to any holder who can trace their title from the indorsement of the qualified indorser
It extends to all indorsees
1 pts
Which of the following statements is correct?
If the marker is an infant, the promissory note is not negotiable
Love and affection can be a valid consideration
Indorsement of an infant transfers title to a negotiable instrument
Parties prior to the infant can escape liability by invoking such infancy

1 pts
Which of the following statements concerning the indorsement of negotiable instruments is correct?
Where the name of a payee or indorsee is wrongly designated or misspelled, he may indorse the
instrument as therein described adding, if he thinks fit, his proper signature
Where any person is under obligation to indorse in representative capacity, he may indorse in such terms
by indicating that he is merely an agent and disclosing his principal to negate personal liability
Both A and B
Neither A nor B

1 pts
What is the prima facie presumption of law regarding the time of indorsement where an instrument does
not bear date after the maturity of the instrument?
Every negotiation is deemed prima facie to have been effected before the instrument was overdue
Every negotiation is deemed prima facie to have been effected after the instrument was overdue
Every negotiation is deemed prima facie to have been effected at maturity date
None of the above

1 pts
A delivers to B a promissory note payable to the order of B without specifying the amount but A
authorized B to place the amount of P500 in the promissory note which was signed by A. B, in violation of
the instruction of A placed P5,000 as the amount payable. Later, B indorsed the note to C, the holder C
Can recover from either A or B
Cannot recover from either A or B, if he knows the defect
Cannot recover from A but can recover from B if he knows the defect
Cannot recover from A but can recover from B if he does not know the defect

1 pts
When does an originally negotiable instrument stop to be negotiable?
When it is restrictively indorsed with words indicating “payable to indorsee only” or “payable to no other
person than indorsee”
When it is discharged by payment in due course or other modes of discharging the negotiable instrument
Either A or B
Neither A nor B

1 pts
One is not a condition to be a holder in due course.
That it is complete and regular upon its face
That he became the holder of it before it was overdue and without notice that it had been previously
dishonored if such was the fact.
That at the time it was negotiated to him it has no infirmity or defect in the title of the person negotiating it
That he took it in good faith and for value

1 pts
In case an instrument payable to order is merely delivered without indorsement, which is true?
The transferee becomes a holder of a negotiable instrument
The transferee shall not be subject to personal defense
The transferee acquires the right to compel the transferor to indorse the instrument to the former
The transferee cannot collect the amount from the maker under any instances.

1 pts
A issued a negotiable promissory note to B. There was a total failure of consideration. B indorsed the
note to C, a holder in due course. C indorsed the note to D who knew of the failure of consideration.
Which is correct?
D may collect from A
D may collect only from C
D may collect only from B
D may collect from either B or C but not from A

1 pts
A is induced through simple fraud (fraud in inducement) committed by B to issue a promissory note in
favor of B. B indorsed the note to C. C has notice of fraud but did not take part in it. C indorsed the note to
D, a holder in due course, D indorsed the note to E who knows how the note was obtained but without
being a party to the fraud. Which is correct? E is
Not a holder in due course and the defense of fraud in inducement can be set-up against him
A holder in due course having derived his title from D, a holder in due course
A holder in due course but he cannot recover from A because he knows how the note was obtained
Not a holder in due course but has all rights of such holder in respect of A, B and C having derived his
title from D

1 pts
In case the instrument payable to order is merely delivered without indorsement and the transferor
indicates the indorsement at a date later than the date of delivery, when does the negotiation takes affect
for the purpose of determining whether the transferee is a holder in due course?
At the time the indorsement was actually made
At the time of the delivery of instrument
At the time of filling the case to compel the transferor to indicate the indorsement
At the time of the original issuance of instrument

1 pts
A makes a note payable to B or order. The following are the indorsers of the note in the order of their
indorsements: B-C-D-E-F-(holder) – G (subsequent holder). The note is dishonored in the hands of F,
who notifies B, C, D and E. Which is not correct? The notice
Given by F to B, inures to the benefit of C, D, E and G
To C inures to the benefit of D, E and G
To D inures to the benefit of E and G
To E inures to the benefit of B, C, D and G

1 pts
A makes a note payable to bearer and delivers it to B. In turn, B negotiated it by mere delivery to C, who
indorsers it specially to D. D negotiates it by special indorsement to E, who negotiates it to F mere
delivery. A did not pay. One is not correct?
F may go after E, his immediate transferor
F cannot hold D liable because F did not acquire title through the indorsement of D
D can hold C liable as C is not only his immediate transferor but he got his title through C’s special
indorsement
F can hold B and C liable because they are parties prior to F

1 pts
Where a person, not otherwise a party to an instrument, places thereon his signature in a blank before
delivery, he is liable as indorser. What is the extent of the liabilities of this “irregular indorser”?
If the instrument is payable to the order of a third person, he is liable to the payee and to all subsequent
parties
If the instrument is payable to the order of the maker or drawer, or is payable to bearer, he is liable to all
parties subsequent to the marker or drawer
If he signs for the accommodation of the payee, he is liable to all parties subsequent to the payee
Any of the above

1 pts
When a bill of exchange is payable on demand, presentment must be made _____________.
On the day it fails due
Before the maturity date
Within a reasonable time after its issue
Within a reasonable time after the last indorsement thereof

1 pts
This is not allowed
Pay to the order of A and B P10,000: To C and D ; Sgd. E
Pay to the order of A or B P10,000: To C and D ; Sgd. E
Pay to the order of A and B P10,000 : To C or D ; Sgd. E
Pay to the order of A and B P10,000 : To C ; Sgd. E

1 pts
What is the presumption of law if joint payees or indorsees indorse the instrument jointly?
Jointly only
Jointly and severally or solidarily
Principally
Directly
1 pts
A promissory note reads:
“I promise to pay B or order P100, 000. Sgd. A”

B negotiated the note to C. Later, Y stole the note from C. Y indorsed the note to D. Which of the following
statements is correct?
If A pays D in good faith, A’s obligation is extinguished
D can collect from B
D cannot collect from A
D can collect from C

1 pts
A promissory note reads:
“I promise to pay B P100,000. Sgd. A”

B assigned the note to C. Later, Y stole the note from C. Which of the following statements is correct?
If A pays Y in good faith, A’s obligation is extinguished
C can collect from B
C can collect from either A or B
C can collect from A

1 pts
Where a broker or other negotiates an instrument without indorsement or by mere delivery a bearer
instrument, what is the nature of liability of such broker or other agent if he fails to disclose the name of
his principal and the fact that he is acting only as agent?
He is liable like a person negotiating the instrument by mere delivery
He is liable like a general indorser
He is liable like a qualified indorser
He is primarily liable like a marker or acceptor

1 pts
What is the main difference between the warranties of an assignor/vendor of a non-negotiable promissory
note and general indorser of negotiable promissory note?
The general indorser guaranties the solvency of maker while an assignor does not guaranty the solvency
of maker
The general indorser warrants the legality of negotiable promissory note while an assignor does not
warrant the legality of the non-negotiable promissory note
The general indorser warrants the existence of negotiable promissory note while an assignor does not
warrant the existence of the non-negotiable promissory note
All of the above

1 pts
What is the prescriptive period for filing an action to the question a manifestly inequitable profit or loss
sharing agreement designated by a third person selected by the partners?
3 months from the date of the receipt of notice of the profit or loss sharing agreement but it must be filed
before the execution of the agreement by the partners
6 months from the date of the receipt of notice of the profit or loss sharing agreement but it must be filed
before the execution of the agreement by the partners
12 months from the date of the receipt of notice of the profit or loss sharing agreement but it must be filed
before the execution of the agreement by the partners
1 months from the date of the receipt of notice of the profit or loss sharing agreement but it must be filed
before the execution of the agreement by the partners

1 pts
Which of the following persons are primarily liable to the negotiable instruments?
Referee in case of need
Accommodation maker or accommodation acceptor
Acceptor for honor
Party accommodated by maker or acceptor

1 pts
Which of the following parties are secondarily liable to the negotiable instruments?
Drawer and general indorsers
Drawer, general indorsers and qualified indorsers
Drawer, general indorsers and qualified indorsers and person negotiating by mere delivery
Marker and acceptor

1 pts
Where an instrument is payable to the order of two or more payees or indorsees who are not partners,
who must indorse the instruments to effectuate valid negotiation?
All of two or more payees or indorsees unless the one indorsing has the authority to indorse for others
Anyone of the payee because the instrument is presumed to be partners
Anyone of the payees because the payees are presumed to be partners
Anyone of the payees because the there is presumption of mutual agency among the payees

1 pts
Which of the following statements is true if a holder negotiates the instrument to a prior party?
The instrument is automatically discharged even if the prior party is a general indorser
The instrument may still be renegotiated by the prior party even if he is the accommodated party by the
maker or acceptor
The prior party is entitled to enforce payment of the instrument against any intervening party to who he
was primarily liable
The prior party may reissue and further negotiate the instrument if he is not an accommodated party by
the maker or acceptor and the instrument is not yet discharged by any other means

1 pts
A non-voting stock may vote in the following corporate acts, except in case of _____________.
Approval of the compensation of directors
Merger or consolidation
Increase or decrease in capital stock
Sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of corporate
property
1 pts
One of the following acts may be performed by the executive committee of a corporation. Which is it?
Declaration of stock dividends
Filling of vacancies in the board of directors
Amendment or repeal of the by-laws or adoption of new by-laws
Approval of contracts in the ordinary course of business

1 pts
A corporation may acquire its own shares for a legitimate purpose provided it has unrestricted retained
earnings. In which of the following acquisition is the requirement of unrestricted retained earnings not
imposed?
When the acquisition is made to eliminate fractional shares
When delinquent shares are acquired in a delinquency sale
When redeemable shares are repurchased in accordance with the terms provided in the article of
incorporation
When shares are acquired from stockholders who exercise their appraisal right

1 pts
A and B entered into a universal partnership of all present property. At the time of their agreement, A had
a four-door apartment, which he inherited from his father 3 years earlier. B, on the other hand, had a
fishpond, which he acquired by dacion en pago from C. During the first year of the partnership, rentals
collected on the four-door apartment amounted to P480,000; while fish harvested from the fishpond were
sold for P300,000. During the same period, B received by way of donation a vacant lot from an uncle. The
partners had a stipulation that future property shall belong to the partnership. Which of the following does
not belong to the common fund of the partnership?
Fishpond
Rental of P480,000
Apartment
Vacant land

1 pts
A and B entered into a universal partnership of profits. At the time of execution of the articles of
partnership, A had a two-door apartment, which he inherited from his father 3 years earlier. B on the other
hand, had a fleet of taxis, which he purchased two years before. In the first year of the partnership, A
earned P500,000 as a radio talent while B won P1,000,000 in the lotto. During the same period, rentals of
P120,000 were collected from the apartment, while fare revenues of P200,000 were realized from the
operation of the fleet of taxis. Which of the following belongs to the partnership?
Two door apartment
Lotto winnings of P1, 000, 000
Salary of P500,000
Fleet of taxis

1 pts
A partnership whereby the partners contribute to a common fund all the property actually belonging to
them at the time of the constitution of the partnership, with the intention of dividing the same among
themselves, as well as the profits which they may acquire therewith is:
Universal partnership of all present property
Universal partnership of profits
Particular partnership
Partnership at will

1 pts
The articles of incorporation differ from the by-laws in that the articles of incorporation are _________.
The rules of action adopted by a corporation for its internal government
Adopted before or after incorporation
A condition precedent in the acquisition by a corporation of a juridical personality
Approved by the stockholders if adopted after the incorporation

1 pts
If the remaining directors constitute a quorum, they can fill up the vacancy
In case of removal of a director
In case of expiration of term of a director
If there is an increase in the number of directors
In case of resignation of a director

1 pts
A, B, C, D, E, F and G are the duly elected directors for 2016 of AAA Corporation whose article of
incorporation provide for 7 directors. On August 1, 2016, Directors A, B, C, D and E met to fill the two
vacancies in the board brought about by the valid removal of F for disloyalty to the corporation and the
death of G. In the said meeting, the remaining directors voted for X to replace F and Y, a son of G, to
replace his father. Both X and Y are owners of at least one share of stock of the corporation. The election
of X and Y by the remaining directors is ___________.
Valid for both X and Y
Not valid for both X and Y
Valid with respect to X, not valid with respect to Y
Not valid with respect to X, not valid with respect to Y

1 pts
A newly admitted general partner is liable to creditors existing at the time of his liability is up to his
___________.
Capital contribution only if there is stipulation
Separate property even if there is no stipulation
Capital contribution even if there is stipulation
Separate property only if there is no stipulation

1 pts
A, B and C are partners. Their contributions are as follows: A- P60,000; B- P40,000 and C- services. The
partners agreed to divide profits and losses in the following proportions: A- 35%; B- 25% and C- 40%. If
there is a loss of P10,000, how should the said loss be shared be shared by the partners?
A P6, 000; B P4, 000; C nothing
A P3, 000; B P2, 000; C P5, 000
A P3, 500; B P3, 500; C P3, 000
A P3, 500; B P2, 500; C P4, 000

1 pts
A, B and C are equal partners in ABC Partnership. The partnership is indebted to D for P150,000. Partner
A is indebted to E for P20,000. D attached and took all the sets of the partnership amounting to P90,000.
B and C are solvent while A is insolvent and all that he owns is a land valued at P15,000. Which is
correct?
E has priority to the land of A as a separate creditor
D has priority to the land of A to cover A’s share of the P60, 000 remaining liability of the partnership
B and C have priority to the land of A if they paid D the P60, 000 remaining liability of the partnership
D and E shall both have priority to the land of A in proportion to their claims of P60, 000 and P20, 000,
respectively

1 pts
A, B and C are partners A is an industrial partner. During the first year of operation, the firm realized a
profit of P60,000. During the second year, the firm sustained a loss of P30,000. Thus, the net profit for the
two years of operation was only P30,000. In the Articles of Partnership, it was agreed that A, The
industrial partner would get 1/3 of the profit but would not share in the losses. How much will A, the
industrial partner get? A will _______________.
Get only P20,000 which is 1/3 of the profit of the 1 st year of operation
Get only P10,000 which is 1/3 of the net profit
Get only P20,000 in the first year and none in the second year
Share in the loss in the second year

1 pts
Goods are deemed no longer in transit
If the goods are rejected by the buyer for a valid reason and the carrier or other bailee continues in
possession of them, even if the seller has refused to receive them back
From the time they are delivered to a carrier by land, water or air for the purpose of transmission to the
buyer
From the time they are delivered to a bailee for the purpose of transmission to the buyer until the buyer or
his agent in that behalf, takes delivery of them from such bailee
If the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his agent in that behalf

1 pts
This serves as a proof of the perfection of the contract of sale.
Dacion en pago
Option money
Delivery
Arras

1 pts
Emptio spei as distinguished from emptio rei speratae.
Sale of a future thing
Should come into existence
Its quantity and quality are unknown
Sale of a present thing

1 pts
This is not an essential element of a contract of sale.
Subject matter which should be determinate
Consent of the contracting parties
Warranty against eviction
Consideration which is certain in money or its equivalent

1 pts
Which of the following is not correct?
A partnership begins from the moment of the execution of the articles of partnership, unless it is otherwise
stipulated
Persons who are prohibited from giving each other any donation or advantage cannot enter into universal
partnership
A particular partnership has for its object determinate things, their use or fruits, or a specific undertaking
or the exercise of a profession or vocation
Articles of universal partnership entered into without specifications of its nature, only constitutes a
universal partnership of profits

1 pts
A and B are partners engaged in the real estate business. A learned that C was interested in buying a
certain parcel of land owned by the partnership, even for a higher price. Without informing B of C’s offer,
A was able to convince B to sell to him (A) his (B’s) share in the partnership. Then A sold the land at a big
profit. Which of the following is correct?
A is liable to B for the latter’s share in the profit
C is liable to B for the latter’s share in the profit
A new partnership is formed between A and C
The sale of the land to C is void since it was without the knowledge of B

1 pts
A and B are partners in a real estate business. A and B were approached by X who offered to buy a
parcel of land owned by the partnership. Thereafter B sold to A, B’s share in the partnership. Then A sold
the land to X at a big profit. Which is correct?
The sale of the land to X is void
A is liable to B for B’s share in the profits
B may rescind the contract between A and X
A is not liable to B for any share in the profits

1 pts
In real estate mortgage, the mortgagor can sell the property mortgaged
Only if with the oral consent of the mortgagee
Only if with the written consent of the mortgagee
If not prohibited to sell
Even without the consent of the mortgagee
1 pts
Which of the following statements is true?
Any stipulation in a contract of pledge authorizing the pledgee to sell the thing pledged if the pledgor
cannot pay is void
In mortgage, the mortgagee is entitled to the entire proceeds of the sale the thing mortgaged
In mortgage and in pacto de retro sale, the title to the property which is the subject matter of the contract
is transferred to the other party
Real estate mortgage is an accessory contract

1 pts
A, 17 years old, sold to B, of legal age, her necklace worth P20,000 for P15,000. Later, B sold the
necklace to C for P20,000. Which of the following statements is correct?
A has got a voidable title because at the time of sale, she is a minor
A can ask for rescission of the sale to C because she suffered a lesion of more than ¼ of the value of the
property
If C is in bad faith, C becomes the owner of the necklace upon delivery to him but his title is voidable
A can ask for the annulment of the sale to C because at the time of sale she is a minor

1 pts
Goods are deemed in transit, _______________________.
When the buyer accepts delivery of the goods upon arrival at destination
When the buyer intercepts and lawfully takes possession of the goods at any point before destination
From the time they are delivered by the seller to a common carrier or other bailee for transmission to the
buyer, up to the time that the buyer or his agent takes delivery of the goods from the carrier or bailee
When the carrier or bailee, upon arrival of the goods at destination acknowledges to the buyer or his
agent that he is holding the goods as bailee for the letter

1 pts
After the death of C, A, C’s son, sold his inheritance though its amount has not yet been determined to B
for consideration of P1,000,000. Which is correct? The contract is ____________.
Valid if the value of inheritance is at least equal to P1, 000, 000
Valid even though the inheritance to be turned over to B is less than P1,000,000
Void as future inheritance cannot be the object of sale
Unenforceable

1 pts
B imported radios from Taiwan and asked for 220 volts radios. The radios arrived clearly labeled 220
volts and B sold them to the public as such. Later the costumer complained that the radios have been
mislabeled by the manufacturer and that they were good only for 110 volts. As a consequence
B is liable to the vendees for any hidden defects even though he is not aware
B is not liable because he is in good faith
B is not liable under the principle of “caveat emptor” or let the buyer beware
The vendees may hold the manufacturer liable but not B because B specifically asked for 220 volts

1 pts
A, B and C are co-owners of an undivided parcel of land, A sold his 1/3 interest to B absolutely. Which is
correct?
C may exercise his right of redemption on the interest sold by A to B
C cannot exercise the right of redemption because the sale was made in favor of a co-owner
The sale made by A to B is void because it was not made in favor of a stranger
C may redeem only ½ of the interest sold by A to B

1 pts
Which of the following is correct?
A contract of agency must be in writing to be a valid agreement
A sale of personal property made by an agent without authority from the owner is void
A sale of a piece of land made by an agent with oral authority from the owner is void
An un-emancipated minor cannot be appointed as agent

1 pts
In which of the following acts may a person not appoint an agent?
To represent the principal in a wedding ceremony where the principal is a principal sponsor
To vote for the principal during the meetings of stockholders where the principal is a stockholder
To represent the principal in a baptismal ceremony where the principal is the father of the child to be
baptized
To attend a meeting of the board of directors of a corporation where the principal is a director

1 pts
To improve the financial condition of his principal, an agent with general powers of administration given to
him by the principal in writing, sold two parcels of land, one for less than the price appearing in the
inventory prepared by the principal and the other for double the price that appeared in the aforesaid
inventory. Which is correct?
Both contracts cannot be enforced against the principal
Both contracts are binding upon the principal
The sale for double the price appearing in the inventory is binding upon the principal
The sale for less than the price appearing in the inventory is binding upon the principal

1 pts
In a contract of sale of personal property, the price of which is payable in installments, the vendor may
exercise any of the following remedies, except _______________.
Exact fulfillment of the obligation, should the vendee fail to pay any installment
Cancel the sale, should the vendee’s failure to pay cover two or more installments
Foreclose the chattel mortgage on the thing sold, if one has been constituted should be vendee’s failure
to pay cover two or more installments
Rescind the sale should the vendee fail to pay any installment

1 pts
A sold to B a parcel of land for P3,800,000. The sale is evidenced by a memorandum of agreement of
sale written in the Bicolano dialect. One week later, A sold the same parcel of land to C for P4,000,000.
This is the evidenced by a formal deed of sale. Upon buying the property, C, who was aware of the first
sale, immediately took possession of the lot. When informed of the second sale, B subsequently
registered an adverse claim to the property. Later, C registered the deed of sale in her favor. The parcel
of land shall belong to _______________.
B because he has got an older title
C because he is the first to register
C because he is the first to take possession
No one as both sales are void

1 pts
A and B orally agreed to form a partnership two years from today, each one to contribute P1,000. If at the
arrival of the period, one refuses to go ahead with the agreement, can the other enforce the agreement?
Yes, because the partnership contract is not governed by the statute of frauds
Yes, because the prior agreement was voluntarily made
No, because the agreement was merely oral
No, since the agreement is to be enforced after one year from the making thereof, the same should be in
a public instrument to be enforceable

1 pts
A, B and C are partners each contributing P10,000. The firm’s indebtedness amounts to P90,000. It was
stipulated that A would be exempted from liability. Assuming that the capital of P30,000 is still in the firm,
which of the following is not correct?
The creditors may get the P30,000 and still collect each 20,000 from A, B and C
A can recover P10,000 each from B and C should A be required to pay the creditors
A cannot recover his original capital of P10,000
The creditors can recover P45,000 each from B and C

1 pts
Which of the following losses will not cause the dissolution of a partnership?
Loss before delivery of a specific thing which a partner had promised to contribute to the partnership
Loss of a specific thing after its delivery to and acquisition of its ownership by the partnership from the
partner who contributed the same
Loss after delivery of a specific thing where the partner contributed only its use and enjoyment, where
such partner reserved the ownership thereof
Loss before delivery of a specific thing where the partner promised to contribute only its use and
enjoyment, reserving the ownership thereof

1 pts
S, a minor, sold her bracelet to B for P8,000. Later, B, needing money to pay her daughter’s tuition fee,
borrowed P15,000 from C and as a security, pledged the bracelet to the latter. B failed to pay C resulting
into the auction sale of the bracelet in favor of D for P10,000 only. Which of the following statements is
correct?
The little of B over the bracelet is not valid, hence the pledge, as well as the sale of said bracelet is
likewise defective. The pledgor must be the owner of the thing pledged
The deficiency of P5, 000 may still be recovered by C from if there is a stipulation to this effect
C can no longer recover the deficiency of P5,000 from B. The pledge, together with the sale is valid. The
voidable title of B is valid because it is not yet annulled
If D was a purchaser in bad faith as he knew of the defective title of B over the bracelet from S, ownership
will not pass to him (D)
1 pts
In the preceding number, assuming what was executed by B in favor of C was a valid chattel mortgage
which was eventually foreclosed and the bracelet was sold to D at the public auction for the same
amount, which statement is correct?
The title of B over the bracelet is not valid, hence the chattel mortgage, as well as the sale of said
bracelet is likewise defective. The mortgagor must be the owner of the thing mortgaged
The deficiency of P5,000 may still be recovered by C from B
C can no longer recover the deficiency of P5, 000 from B as the mortgage, together with the foreclosure
sale, was valid. The title of B was still valid
If D was a purchaser in bad faith as he knew defective title of B over the bracelet, ownership will not pass
to him (D)

1 pts
A, B and C are capitalist partners while D is an industrial partner. A, the managing partner engaged
personally in a business that is the same business of the partnership without the consent of the other
partners. As a result, _______________.
If there are losses, the partnership will bear the losses
If there are profits, the profits will be shared by A and the partnership
If there are profits, A will give the profits to the partnership
A will be excluded from the partnership and will pay damages

1 pts
A, managing partner, is B’s creditor to the amount of P1,000 already demandable. B also owes the
partnership P1,000, also demandable. A collects P1,000 from B one is not correct
If A gives receipt for the partnership, it is the partnership’s credit that has been collected
If A gives a receipt for his own credit, it is A’s credit that has been collected
If A gives a receipt for his own credit, P500 will be given to him, P500 to the partnership
B may decide that he is paying only A’s credit if the personal credit of A is more onerous to B

1 pts
A and B are equal partners in AB Partnership by contributing P50,000 each on June 1, 2016. On July 1,
2016, the partnership contracted an obligation to pay Z the amount of P180,000 on August 31, 2016. On
August 10, 2016, C was admitted as a new partner. C contributed P50,000. How will the obligation be
paid?
A P60,000; B P60,000; C P60,000
A P90,000; B P90,000; C None
A P180,000; B P180,000 and C P50, 000
A P65,000; B P65,000; C P50,000

1 pts
A, B and C are equal partners in ABC Partnership. On April 29, 2016, C died. Not knowing that C is dead,
on May 2, 2016, A contracted a liability to D who also did not know about the death of C. the liability is
P90,000. After D exhausted the net assets of the partnership in the amount of P60,000, he can collect
_________________.
P30, 000 from A or P30, 000 from B
P15, 000 from A and P15, 000 from B
P10, 000 from the estate of C, P10, 000 from A and P10, 000 from B
P30, 000 from the estate of C, P30, 000 from B or P30, 000 from C

1 pts
A mortgaged his residential land to B as a guarantee for the payment of P400,000 obligation to B. They
agreed that A should not sell the land while the obligation exists. Before the maturity of the mortgage, C
offered to buy the land from A. Which is correct?
A cannot sell the land to C because of the agreement not to sell
A can sell the land to C only if B consents in writing’
A can sell the land to C despite the agreement not to sell
A cannot sell the land to C unless A pays the obligation

1 pts
A offered to sell for P12,000,000 her house and lot to B who was interested in buying the same. In her
letter to B, A stated that she is giving B a period of one month within which to raise the amount and that
as soon as B is ready, they will sign the deed of sale. Five days before the expiration of the one month
period. A went to B and told her that she is no longer willing to sell the property unless the price is
increased to P15,000,000. Which is correct?
B may compel A to accept the P12, 000, 000 first offered
A may compel B to pay P15, 000, 000
A and B should shoulder the P3, 000, 000 difference
B cannot compel A to accept the P12,000,000 first offered

1 pts
A leased to B a 5 DOC generator for two years at a lease rental fee of P1,000 per month and signed an
option in favor of B to buy the generator at the end of the term of the lease at P60,000. All rental fees paid
are to be considered as partial payment of the sale. After 12 months, B was able to pay the rental fees for
9 months and was in arrears for three months. A terminated the lease contract and repossessed the
generator. The consequence of the transaction is
A can collect the rental fees for three months which are in arrears
A can collect the rental fees for the unexpired 12 months of the lease contract
When A took possession of the generator, he has no further action against B
A in terminating the lease and repossessing the generator is obliged to refund the 9 months rental fee,
paid by even if there is a stipulation to the contrary

1 pts
X sold his car to Y for P50, 000. No date was fixed for the performances of the obligation of the seller and
the buyer. The obligation of X is __________________.
To deliver the car immediately because the sale is a perfected contract
To deliver the car only after Y writes to X demanding the delivery of the car
To deliver the car only after Y pays the P50, 000
To rescind the contract because there is no time fixed for the delivery

1 pts
Which of the following statements is false?
Treasury shares revert to the unissued shares of the corporation and being in the treasury, they don’t
have the status of outstanding shares
Shares issued without par value shall be deemed fully paid and non-assessable and the holder of such
shares shall not be liable to the corporation or its creditors in respect thereto
Redeemable shares may be redeemed regardless of the existence of unrestricted retained earnings
provided such redemption would not cause insolvency or inability of the corporation to meet its debts as
they mature
When par value shares are issued above par, the premium or excess is not to be considered as part of
the legal capital

1 pts
S sold to B a specific car for P200,000 payable in four equal installments. S delivered the car to B but
required B to mortgage it back to S to answer for the unpaid installments. B paid the 1 st and
2nd installments but he failed to pay the balance. S foreclosed the mortgaged property and sold it at public
auction for P80,000. As a result, ________________.
S can recover from B the balance or P20, 000
S can recover from B the balance of P20, 000 if there is stipulation to that effect
S cannot recover the deficiency any more even if there is stipulation to that effect
S cannot recover the deficiency except if there is stipulation

1 pts
Which of the following is not correct as regards pledge and mortgage?
The creditors can foreclose the things pledged or mortgaged in case of non-payment of the obligation
The things pledged or mortgaged are delivered to the creditors to secure the fulfillment of the obligation
In case of default, the creditors cannot appropriate the things pledged or mortgaged even if stipulated
A pledge or mortgage cannot exist without a valid obligation

1 pts
A, B and C, capitalist partners, each contributed P10,000 and D, the industrial partner contributed his
services. Suppose X, is the creditor of the firm amounting to P90,000. After getting the P30,000 capital
assets of the partnership, which is correct? X can recover __________.
Php 20, 000 each from A, B and C only
Php 60, 000 from either A or B or C
Php 15, 000 each from A, B, C and D
Php 15, 000 each from A, B and C but D is exempt because he is an industrial partner

1 pts
A, B and C are partners. D is admitted as a new partner. Will D be liable for partnership obligations
contracted prior to his admission to the partnership?
No, only for those contracted after his admission
Yes, and his liability would extend to his own individual property
Yes, but his liability will extend only to his share in the partnership property and not to his own individual
property
Yes, as if he had been an original partner

1 pts
A, B and C, are capitalist partners, each contributed P10,000. After exhausting the assets of the firm, the
firm’s indebtedness amounts to P90,000. It was stipulated that A would be exempted from liability. Which
is correct?
A may recover his original capital of P10, 000
The creditors may collect P30,000 each from A, B, and C
A can recover P20, 000 each from B and C should he be required to pay the creditors
The creditors can recover P45, 000 each from B and C

1 pts
The assets of the corporation as represented by its capital stock are to be maintained unimpaired that
there can be no distribution of such assets among the stockholders without provision being first made for
the payment of corporate debts ____________.
Doctrine of corporate fiction
Trust fund doctrine
Doctrine of corporate opportunity
Doctrine of limited capacity

1 pts
The corporation shall be deemed dissolved and its corporate power cease, if from the date of its
incorporation, it does not formally organize and commence the transaction of its business or the
construction of its works within _____________.
4 years
3 years
2 years
5 years

1 pts
A representative action where a stockholder brings an action in the name and in behalf of the corporation
and any relief obtained belongs to the corporation and not to the stockholders individually or collectively
_______________.
Individual suit
Derivative suit
Representative suit
Corporate suit

1 pts
Stock dividends differ from cash dividend in that stock dividend
Do not increase the legal capital
Involves the disbursement of corporate funds
Require the approval of both the board of directors and the stockholders
Once received by the stockholders, are beyond the reach of corporate creditors

1 pts
The board of directors of a corporation consists of (9) members, where 2 were removed and 2 have
resigned , who fills up the vacancy?
First answer-the remaining members of the board
Second answer-the stockholders
Both answers are true
Both answers are false
Only the first answer is true
Only the second answer is true

1 pts
As regards treasury shares, which is not correct?
They have no voting rights as long they remain in the treasury
They are considered as part of earned or surplus profits and therefore distributable as dividends
They are not entitled to dividends
They may be distributed as property dividend if there are retained earnings arising from the business of
the corporation

1 pts
A corporate officer or director cannot, take advantage for their personal benefit a business opportunity
which the corporation is financially able to undertake
Doctrine of corporate fiction
Trust fund doctrine
Doctrine of corporate opportunity
Doctrine of limited capacity

1 pts
May rightfully question an ultra-vires act of a corporation, except _______________.
Stockholders
State
Competitors
Creditors, if fraud is charged

1 pts
On July 15, 2008, X entered into a contract with Y. On February 10, 2009, X discovered that fraud was
committed at the time he entered into the contract, a fraud that vitiated the consent. The action for
annulment shall be brought _________________.
Within three years from the time of the fraud
Within four years from February 10, 2009
Within four years from the time A entered into the contract
A can rescind the contract for non-payment of the price.

1 pts
On September 1, 2009 A entered into a contract with B whereby A sells to B 5,000 sacks of sugar to be
delivered on the 15th and to be paid in full on the 30th. There was no agreement for rescission based on
non-payment. A did not deliver on the 15th but on the 30th, he was willing and offering to deliver but
B did not make payment on said date and so A did not like it and refused to make delivery. Decide.
A cannot rescind the contract for non-payment of the price
A must wait for B to pay the price.
B is not entitled to recover damages.
A can rescind the contract for non-payment of the price.

1 pts
Statement No. 1: Dolo incidente entitles the person against whom it was employed the right to seek the
annulment of the contract.
Statement No. 2: A stipulation pour autrui is an exception to the rule on mutuality of contracts,
Both are true
Both are false
No.1is true; No.2 is false
No.1 is false; No.2 is true

1 pts
A has a daughter, B; X has a son, Y. A, B, X and Y agree together that Y will marry B. the agreement is
oral. If B later on refuses to marry Y who has spent for the necessary wedding preparation, X and Y
decided to bring an action against A and B, will the action prosper? Decide.
Between Y and B, the action will prosper because the agreement is made orally.
In case of A and X, the action will prosper because the agreement which was made orally is enforceable
as it is based in the consideration of marriage.
As to A and X, the action will not prosper because the agreement is not enforceable as it was not they
who mutually promised to marry each other.
The action of X and Y against A and B will prosper because the agreement is based on the consideration
of marriage other than a mutual promise to marry.

1 pts
Which of the following is correct?
An action to enforce judicially a natural obligation prescribes in 4 years
An action for annulment of contract is imprescriptible.
An action to declare a contract void is subject to prescription of 10 years
An action for rescission of contract based on lesion is only a subsidiary remedy.

1 pts
A, guardian of B, bought B’s house and lot worth P480,000 for P240,000 or over ¼ lesion
The contract can be rescinded because of inadequacy of price
The contract can be voided
The contract is void
The contract cannot be rescind because it is expressly provided by law as one of the contract which
cannot be rescinded.