1.

In quasi-delict the liability of a person who is held liable for the fault or negligence of another who is under
his care or responsibility shall cease if: Group of answer choices

A. He observed ordinary diligence to prevent the damage.

B. He observed the diligence of a father of a good family.
C. There was contributory negligence on the part of the person injured.
D. He was not present at the time of the act; hence, it was not possible to him to prevent the damage.

2. A condition which if imposed on obligation will be disregarded and will therefore make the obligation
immediately demandable. Group of answer choices

A. If Rara kills Rere.

B. If Riri passes the CPA Board Exam.
C. If Ruru will not rise from the dead.
D. If Roro commits suicide.

3. Eight years ago, when M was 17 years old, G, his guardian, sold M’s car for P200,000.00 to B. The car, at
that time, had a value of P300,000.00. Who may rescind the sale of the car today? Group of answer choices

A. M, because he suffered lesion.

B. B, because he was the one who entered into the contract in behalf of M.
C. None of M, G and B may rescind the contract.
D. B, the other party to the contract.

4. X owes Y Php2M due on April 30, 2019. X mortgaged his house as guaranty for the debt. On September 6,
2019, the mortgage house was completely destroyed by typhoon “Paeng.” A week after, Y demanded
payment. Is the demand valid? Group of answer choices

A. Yes, for the debt becomes demandable because the security established is for the benefit of the
creditor.
B. No, the obligation is extinguished because the object of the obligation is lost thru a fortuitous event.
C. No, because the obligation is one with a definite period and the demand would be prejudicial to the
rights of the debtor.
D. Yes, the debt becomes demandable because the collateral was lost thru a fortuitous event.

5. As a rule, the following may be the object of a contract, except: Group of answer choices

A. Things which are not outside the commerce of men.

B. Transmissible rights.
C. Services, which are not contrary to law, morals, good customs, public order or public policy.
D. Future inheritance.

6. This is not a characteristic of a void or inexistent contract. Group of answer choices

A. Not subject to ratification.

B. The right to raise a defense of illegality cannot be waived.
 C. Defense of illegality of the contract is available to third persons whose interest are not directly
affected.
D. The action or defense for declaration of nullity or inexistence of the contract does not prescribe.

7. Which of the following statements pertaining to no-par shares is incorrect? Group of answer choices

A. Subscription to no par shares in excess of the issued price shall be available for distribution as stock
dividends.
B. Shares without par value may not be issued for a consideration of less than P5.00 per share.
C. Subscription to no-par shares are deemed fully paid and non-assessable.
D. No par shares may not be issued by banks, trust companies, insurance companies, public utilities, pre-
need companies and building and loan associations.

8. A corporation may acquire its own shares for a legitimate purpose provided it has unrestricted retained
earnings. In which of the following acquisitions is the requirement of unrestricted retained earnings not
imposed? Group of answer choices

A. When redeemable shares are repurchased in accordance with the terms provided in the articles of
incorporation.
B. When delinquent shares are acquired in a delinquency sale.
C. When the acquisition is made to eliminate fractional shares.
D. When shares are acquired from stockholders who exercise their appraisal right.

9. A, B and C organized a partnership for the purpose of engaging in the transportation business. Without the
previous express authority, A contracted indebtedness for automobile supplies and accessories. Group of
answer choices

A. The partnership is not liable because A is not a managing partner.

B. The partnership is liable, there being no agreement as regards to management, A is deemed an agent
of the partnership.
C. The partnership is liable because the purchase is for its benefit.
D. The partnership is not liable since A has no authority to contract the indebtedness.

10. A and B are partners in a partnership known as AB & Co. They agreed that they would contribute all their
properties to a common fund for the purpose of dividing the same between themselves, as well as the profits
to be derived therefrom. The partnership formed by the contract of A and B is: Group of answer choices

A. Particular partnership.
B. Universal partnership of profits.
C. Universal partnership of all present property.
D. General partnership.

11. A, B, C, D and E distributed calling cards identifying themselves as directors of Summit Corporation to
several individuals during a business conference. In reality, however, no such corporation is registered with
the SEC. X who received a calling card granted a credit amounting to P50,000.00 to Summit Corporation
believing that such a corporation really existed. When the supposed the corporation was unable to pay, X
brought a court action against it. At that time, Summit Corporation had assets of P30,000.00. Group of answer
choices

A. A, B, C, D and E can move for the dismissal of the court action because Summit Corporation has no
personality of its own.
B. X can go after the separate assets of A, B, C, D and E after exhausting the assets of Summit Corporation.
C. X cannot allege the lack of juridical personality on the part of Summit Corporation because he is
estopped from doing so.
D. Summit Corporation is liable only up to P30,000.00, its remaining assets, since it is different from A, B,
C, D and E who are not liable in their individual capacities.

12. Where a director, by virtue of his office, acquired for himself a business opportunity which belong to the
corporation, thereby obtaining profits to the prejudice of such corporation, he must account to the latter for
all such profits by refunding the same, unless his act is ratified by: Group of answer choices

A. A unanimous vote of all the stockholders of the corporation.

B. A vote of stockholders owning or representing at least one-third (1/3) of the outstanding capital stock.
C. A vote at a regular or special meeting by stockholders owning or representing a majority of the
outstanding capital stock.
D. A vote of stockholders owning or representing at least two-third (2/3) of the outstanding capital stock.

13. The following parties to an instrument are presented to you:

I. Drawee/Acceptor

II. Maker

III. Drawer

IV. Indorser/s

Notice of dishonor of the instrument is necessary to charge which parties? Group of answer choices

A. II and III.
B. I and II.
C. III and IV.
D. I and IV.

14. Assuming that the other requisites for negotiability are present, which of the following instruments is not
negotiable? Group of answer choices

A. “Pay to P or bearer P10,000.00 sixty days after date with interest at 1% per month.”
B. “I promise to pay P or order P10,000.00 on May 6, 2020 with interest.”
C. “I promise to pay P or order P50,000.00 on April 30, 2020. In case of default, I bind myself to pay
attorney’s fees.”
D. “I promise to pay P or order P10,000.00 in five installments.”
15. A bill of exchange payable to the order of P for P10,000.00 shows R as the drawer. P presents the bill to W
who accepts it. Thereafter, P indorses the bill to A, and A to H. On due date, H present the bill to W for
payment but W refuses to pay on the ground that he did not know that R’s signature was forged. A was not
likewise aware that R’s signature was forged. Against whom may H proceed? Group of answer choices

A. W and P only.
B. P only.
C. W, R, P and A.
D. W, P and A only.

16 An instrument payable to order may be negotiated by: Group of answer choices

A. Indorsement plus delivery.

B. Indorsement without delivery.
C. Answer not given.
D. Mere delivery.

17. The following instruments are presented to you for evaluation:

I. “Pay to the order of Pablo Patricio P20,000.00 in goods which are displayed at your store.”
II. “Pay to the order of Pablo Patricio P20,000.00 or deliver to him a computer of the same value at his option.”
Assuming all the other requisites of negotiability are present: Group of answer choices

A. Both instruments are negotiable.

B. Both instruments are not negotiable.
C. Instrument I is not negotiable; Instrument II is negotiable.
D. Instrument I is negotiable; Instrument II is not negotiable.

18. A party secondarily liable is discharged in the following cases, except: Group of answer choices

A. By any agreement binding upon the holder to extend the time of payment.
B. By the valid tender of payment of the instrument by a subsequent party to the holder.
C. By the discharge of a prior party.
D. By the release of the principal debtor.

19. Shares of stock may be delivered by: Group of answer choices

A. Actual Traditio.
B. Traditio Longa Manu.
C. Traditio Brevi Manu.
D. Quasi-traditio.

20. On March 1, 2020, A sold and delivered to B a television set of P10,000.00 “on sale or return” giving B up
to March 16, 2020 within which to return the television set. On March 10, 2020, the television set was burned
through no fault of B. Based on the foregoing, which of the following statements is incorrect? Group of answer
choices
 A. A must bear the loss since the time for the return of the television set had not yet expired.
B. The ownership of the television set was transferred to B upon delivery to him.
C. B must bear the loss of the television set.
D. B must pay the price of the television set.

21. Knowing that the car had a hidden crack in the engine, X sold it to Y without informing the latter about it.
In any event, the deed of sale expressly stipulated that X was not liable for hidden defects. Does Y have the
right to demand from X a reimbursement of what he spent to repair the engine plus damages. Group of
answer choices

A. Yes, X is liable whether or not he was aware of the hidden defects.

B. No, because Y is in estoppel, having changed engine without prior demand.
C. Yes, since the defect was not hidden; X knew of it but he acted in bad faith in not disclosing the fact to
Y.
D. No, because Y waived the warranty against hidden defects.

22. Three of the following are the elements of the vendor’s right of stoppage in transitu. What is the
exception? Group of answer choices

A. The seller must be in possession of the goods.

B. The seller must be unpaid.
C. The buyer must be insolvent.
D. The goods must be in transit.

23. L entered into a contract to sell with R, undertaking to convey to the latter one of the five lots he owns,
without specifying which lot it was for the price of Php 1M. Later, the parties could not agree which of five lots
he owned L undertook to sell to R. What is the standing of the contract? Group of answer choices

A. Rescissible.
B. Unenforceable.
C. Voidable.
D. Void.

24. In a true pacto de retro sale, the title and ownership of the property sold are immediately vested in the
vendee a retro subject only to the resolutory condition of repurchase by the vendor within the stipulated
period. This is known as? Group of answer choices

A. Conventional Redemption.
B. Equitable Mortgage.
C. Equity of Redemption.
D. Legal Redemption.