CPAR

CPA Review School of the Philippines

62/80
FIRST PRE-BOARD EXAMINATION
Regulatory Framework for Business Transactions

Instructions: Choose the BEST answer for each of the following items. Mark only one answer for
each item on the Special Answer Sheet provided. Strictly no erasure allowed.

1. A contract is presumed to have been entered into

a. In the place where the offer was made
b. In the place where the acceptance was made
c. In the place where the performance was made
d. In the place where the payment was made

2. Before acceptance is conveyed, an offer becomes ineffective upon the death, civil interdiction,
insanity or insolvency
a. Of the offeror
b. Of the offeree
c. Of either party
d. Of both the offeror and offeree

3. Which of the following is not correct?

a. The obligation to give includes that of delivering all its accessions and accessories even
though they may not have been mentioned
b. If a person obliged to do something fails to do it, the same shall be executed at his cost
c. When the obligation consists in not doing, and the obligor does what has been forbidden
him, it shall be undone at his expense
d. In reciprocal obligations, from the moment one of the parties fulfills his obligation, delay
by the other begins

4. A pointed a gun and threatened to kill B if B will not sign a promissory note which reads “I
promise to pay A, P100,000”. Out of fear, B signed the note. It turned out that two days earlier,
A’s obligation to B amounting to P100,000 became due and B demanded payment. Now, A
alleges compensation. Is A correct?
a. Yes, because the promissory note is valid
b. No, because the promissory note was signed only because there was intimidation
c. Yes, provided B will agree
d. No, because A’s obligation does not exist

5. A, B and C solidarily owe W and Y, solidary creditors Php 24,000, where the share of the
debtors is 2:3:5 while the creditors is 1:2. The terms of the contract provide:
1. A will pay if Y will pass the October 2019 CPA Board Exams
2. B will pay on February 14, 2020
3. C will pay on September 10, 2019
On September 10, 2019, W can collect from
a. A = Php 24,000 b. B = Php 12,000 c. C = Php 24,000 d. C = Php 8,000

6. Using the above data, the debtor who effected payment is entitled to get reimbursement from
a. B = Php 12,000 b. A = Php 12,000 c. C = Php 12,000 d. A or B = Php 12,000

1|Page
 7. Assuming Y passed the October 2019 CPA Board Exams, Y can collect from
a. A or C = Php 16,800 b. B = Php 4,800 c. A = Php 12,000 d. A or B or C = Php
12,000
Assume that the obligation on September 10 was already paid.
8. On January 15, 2019, A obliged himself to give to B his only cow or his only dog or his only
cat on December 25, 2019. On July 4, 2019, the cow died after giving birth to a young cow.
Two months later, the cat died due to the fault of A. And on November 1, 2019, the dog died
due to a fortuitous event. Which of the following is true?
a. The obligation of A is extinguished
b. B is entitled to the young cow having been born after the perfection of the contract
c. A is liable for the value of the cat plus damages
d. B can require A to replace the cat by another cat which is equally satisfactory

9. Using the above data, but the right of choice belongs to B, which of the following is correct?
a. The obligation of A is extinguished
b. B is entitled to the young cow having been born after the perfection of the contract
c. A is liable for the value of the cat plus damages
d. B can require A to replace the cat by another cat which is equally satisfactory

10. Using the preceding number, except that the dog is still alive, which of the following is not
correct?
a. The obligation of A is converted to a simple obligation
b. B can require A to deliver the dog but without damages
c. A is not liable for the death of the cow
d. B can require A to pay the value of the cat plus damages

11. When the condition has been imposed with the intention of suspending the efficacy of an
obligation to give, the following rules shall be observed, except
a. If the thing is lost, the obligation shall be extinguished
b. If the thing is improved by nature, the improvement shall inure to the benefit of the creditor
c. If the thing is improved at the expense of the debtor, he shall have no other right than that
granted to the usufructuary
d. If the thing deteriorates without the fault of the debtor, the impairment is to be borne by the
creditor

12. It is understood to be that which must necessarily come although it may not be known when
a. Passing the CPA Board Exam c. A priest becoming a saint
b. The birth of a child d. A day certain

13. The expenses of consignation, when properly made shall be charged against
a. The debtor c. Both the debtor and creditor
b. The creditor d. Neither the debtor nor creditor

14. Statement 1 – In expromission, the new debtor’s insolvency or non-fulfillment of the obligation
shall not give rise to any liability on the part of the original debtor may exceptions na marevive pa kaya false, kung sinabi
sanang not aware, hindi na marevive

Statement 2 - In delegacion, the insolvency of the new debtor, shall not revive the action of the
both expromission and degegacion,
expromission - initiative comes from the new debtor
pwede marevive
creditor against the original debtor possibility - old debtor not aware or old debtor aware (did not object) or aware (consented)
cause - new debtor is insolvent at the time of expromission - no
except: mabubuhay if old debtor aware and did not object / or consented to expromission
a. True, true b. True, false c. False, true d. False, false

15. In payment of 10 grams of shabu, A made a promissory note which reads “I promise to pay B
P10,000. Sgd. A”. B transferred the note to C, who acted in good faith. Which is correct?
a. C can collect from A c. C can collect from either A or B
b. B can collect from A d. C can collect from B
Walang right si B sa promissory note kasi illegal yung cause nila. So wala siyang right na naipasa kay C.
Therefore liable si B kay C.
2|Page
16. A, B, C and D are joint debtors of V, W, X, Y and Z, solidary creditors the sum of P20,000.
Which is correct?
a. V may collect from B, P20,000 c. V may collect from B P5,000
b. V may collect from B P4,000 d. V may collect from B P1,000

17. D owes C P6,000. No date for payment was stipulated by the parties. Which is correct?
a. C can require D to pay when the period arrives
b. C can require D to pay at anytime
c. D is not liable to C because the obligation is void there being no date of payment
d. D is not required to pay unless C goes to court and asks the court to require D to pay

18. In January 2012, S, 17 years old, sold his only car to B, 21 years old. The sale was without the
knowledge of G, the guardian of S. Assuming that an annulment case is filed today, which is
correct?
a. S may bring the action for annulment c. B may bring the action for annulment
b. G may bring the action for annulment d. Annulment will not prosper whoever will
file it

19. The following items, pertain to a contract of sale, which pertains to contract to sell?
a. Ownership of the thing sold is transferred upon delivery
b. Ownership of the thing is transferred to the buyer at some future time
c. The risk of loss is on the buyer upon delivery
d. The risk of loss is on the buyer if the price is not yet fully paid

20. On August 1, 2019, A agreed to sell his only cow to B and B agreed to pay the price of P20,000,
if B will pass the October 2019 CPA Examination. The list of successful examinees was
released on October 19, 2019 and B is one of those who passed the examination. As a result,
a. A is entitled to the P20,000 price plus interest beginning August 1, 2019
b. B is entitled to the cow and its fruits beginning October 19, 2019
c. B is entitled to the cow beginning August 1, 2019 and to its fruits beginning October 19,
2019
d. A shall deliver the fruits of the cow and B shall pay the interest on the price beginning
August 1, 2019

21. A and B are solidary debtors of C for P100,000 which is due on August 1, 2020. Thinking that
the obligation is already due, A paid C P100,000 on August 1, 2019. What rights will A have
on February 1, 2020?
a. A can recover P50,000 reimbursement from B without interest
b. A can recover P100,000 from C plus interest from August 1 2019 to February 1, 2020
c. A can recover P50,000 reimbursement from B with interest from August 1, 2019 to
February 1, 2020
d. A cannot recover yet from either B because the obligation is not yet due or C because the
payment was voluntary

22. Using the preceding number, but it is already September 1, 2020, which of the following is
correct? A can recover
a. A can recover from C only the interest from August 1, 2019 to July 31, 2020.
b. A can recover P50,000 from B plus interest from August 1, 2019 to August 1, 2020.
c. A can recover P50,000 from B plus interest from August 1, 2019 to September 1, 2020
d. A can recover from C only the interest from August 1, 2019 to September 1, 2020

3|Page
23. A, B and C are obliged to deliver a specific cow to W and Y on August 1, 2020. If today is
August 1, 2020, which of the following is true?
a. A demand made by W against A, B and C constitutes a valid demand against all debtors
b. A demand made by W and Y against A will make the debtors in delay
c. If debtor A cannot fulfill his share in the obligation, the obligation of B and C is converted
into a monetary obligation to pay the corresponding portion of the value of the cow without
damages Wala kasi sinabi if solidary or joint. So assume na ito ay joint. Other partners can't be made liable to the share of other partners.
Those that cannot fulfill will be the one to answer the damages. (JOINT OBLIGATION)
d. If debtor A is insolvent, the obligation of A, B and C is converted into a monetary obligation
to pay the value of the cow plus damages

24. A lost his cell phone while inside a restroom. It was found by B who diligently searched for
the owner but to no avail. Later, the cell phone was purchased by C, a buyer in good faith.
Subsequently A traced his cell phone while being used by C. In this case
a. C acquires ownership over the cell phone
b. A can recover the cell phone from C upon reimbursement of the purchase price
c. C should return the cell phone to A if B will return the purchase price
d. B's title is void; hence C did not acquire a valid title over the cell phone

25. In a contract of sale, the parties agreed that the buyer shall be the one to fix the price subject
to approval by the seller. The object was delivered to and accepted by the buyer. After a
reasonable period of time, the buyer has not yet fixed the price but has appropriated the
thing. The seller is now demanding for the payment of the price, in this case, the seller is
a. Entitled to the payment of a reasonable price therefore.
b. Entitled to the payment of the price based on the fair market value at the time of delivery
c. Entitled to the payment of the price based on the fair market value at the time of
perfection of the contract of sale
d. Not entitled to payment of the price because the price has not yet been fixed as agreed
upon

26. A and B entered into a universal partnership of all present property. No stipulation was made
regarding future property. After the perfection of the contract, A inherited a parcel of land
and B acquired a car as remuneration for services rendered. The properties acquired after the
perfection of the contract belong to
Land Car
a. A B
b. A Partnership
c. Partnership B
d. Partnership Partnership

27. In case the members of the board of directors of a corporation still constitute a quorum, and
there are vacancies, who will fill up such vacancies?
Removal Resignation Expiration of term Increase in the number of Directors
a. Stockholders Board Stockholders Board
b. Board Board Stockholders Stockholders
c. Stockholders Board Stockholders Stockholders
d. Stockholders Stockholders Board Stockholders

4|Page
28. The principle of “caveat emptor" or let the buyer beware will not apply in
a. Sheriff's sale c. Auction sales
b. Sales of animals in pairs d. Sales of livestock as condemned

29. A, B C and D are solidary debtors of X for Php 40,000. X released D from the payment of
his share of Php 10,000. When the obligation became due and demandable C turned out to
be insolvent. Should the share of the insolvent debtor C be divided only between the two
other remaining debtors, A and B?
a. Yes. Remission of D's share carries with it total extinguishment of his obligation to the
benefit of the solidary debtors.
b. Yes. The Civil Code recognizes remission as a mode of extinguishing an obligation. This
clearly applies to D.
c. No. The rule is that gratuitous acts should be restrictively construed, allowing only the
least transmission of rights.
d. No. As the release of the share of one debtor would then increase the burden of the other
debtors without their consent.

For Questions Nos. 30 - 31:

A obtained a loan of Php 300,000 from B payable on March 25, 2022. As security for the
payment of his loan, A constituted a mortgage on his residential house and lot in B’s favor.
C, a good friend of A, guaranteed and obligated himself to pay B in case A fails to pay his
loan at maturity.

30. If A fails to pay B his loan on March 25, 2022, can B compel C to pay?
a. No. В cannot compel C to pay because as guarantor, C can invoke the principle of
excussion, i.e., all assets of B must first be exhausted.
b. No. В cannot compel C to pay because B has not exhausted the available remedies against
A
c. Yes. B can compel C to pay because the nature of C's undertaking indicates that he has
bound himself solidarily with A
d. Yes. B can compel C who bound himself to unconditionally pay in case A fails to pay,
thus the benefit of excussion will not apply.

31. If A sells his residential house and lot to D, can B foreclose the real estate mortgage?
a. Yes. B can foreclose the real estate mortgage because real estate mortgage creates a real
right that attaches to the property
b. Yes. B can foreclose the real estate mortgage, It is binding upon D as the mortgage is
embodied in a public instrument
c. No, В cannot foreclose the real estate mortgage. The sale confers ownership on the buyer,
D, who must therefore consent
d. No. В cannot foreclose the real estate mortgage. To deprive the new owner of ownership
and possession is unjust and inequitable.

5|Page
32. Cruz lent Jose his car until Jose finish his Bar Examination. Soon after Cruz delivered the
car, Jose brought it to Mitsubishi Cubao for maintenance check-up and incurred a cost of
Php 8,000. Seeing the car's peeling and faded paint, Jose also had the car repainted for Php
10,000. After the Bar Exam, Cruz asked for the return of his car. Jose said he would return it
as soon as Cruz has reimbursed him for the car maintenance and repainting cost of Php
18,000. Is Jose's refusal justified?
a. No. Jose's refusal is not justified. In this kind of contract, Jose is obliged to pay for all the
expenses incurred for the preservation of the thing loaned.
b. Yes. Jose's refusal is justified. He is obliged to pay for all the ordinary and extraordinary
expenses, but subject to reimbursement from Cruz
c. Yes. Jose's refusal is justified. The principle of unjust enrichment warrants the
reimbursement of Jose's expenses
d. No. Jose's refusal is not justified. The expenses he incurred are useful for the preservation
of the thing loaned. It is Jose's obligation to shoulder these useful expenses.

For Questions Nos. 33 – 34:

Gary is a tobacco trader and also a lending investor. He sold tobacco leaves to Homer for
delivery within a month although the period for delivery was not guaranteed. Despite Gary's
efforts to deliver on time, transportation problems and government red tape hindered his
efforts and he could only deliver after 30 days. Homer refused to accept the late delivery and
to pay on the ground that the agreed term had not been complied with. As lending investor,
Gary granted a Php 1M loan to Isaac to be paid within two years from the execution of the
contract. As security for the loan, Isaac promised to deliver to Gary his Toyota Innova
within seven days but Isaac failed to do so. Gary was thus compelled to demand payment for
the loan before the end of the agreed two year term.

33. Was Homer justified in refusing to accept the tobacco leaves?

a. Yes, Homer was justified in refusing to accept the tobacco leaves. The delivery was to be
made within a month. Gary's promise of delivery on a "best effort" basis made the
delivery uncertain. The term therefore was ambiguous
b. No. Homer was not justified in refusing to accept the tobacco leaves. He consented to the
terms and condition of the sale and must abide by it. Obligations arising from contracts
have the force of law between the contracting parties
c. Yes. Homer was justified in his refusal to accept delivery. The contract contemplates an
obligation with a term. Since the delivery was made after 30 days, contrary to the terms
agreed upon, Gary could not insist that Homer accepts the tobacco leaves
d. No. Homer was not justified in refusing to accept the tobacco leaves. There was no term
in the contract but a mixed condition. The fulfillment of the condition did not depend
purely on Gary's will but on other factors, e.g., the shipping company and the government.
Homer should comply with his obligation

6|Page
34. Can Gary compel Isaac to pay his loan even before the end of the two year period?
a. Yes. Gary can compel Isaac to immediately pay the loan. Noncompliance with the
promised guaranty or security renders the obligation immediately demandable. Isaac lost
his right to make use of the period.
b. Yes. Gary can compel Isaac to immediately pay the loan. The delivery of the Toyota
Innova is a condition for the loan. Isaac's failure to deliver the car violated the condition
upon which the loan was granted. It is but fair for Gary to demand immediate payment.
c. No. Gary cannot compel Isaac to immediately pay the loan. The delivery of the car as
security for the loan is an accessory contract, the principal contract is still the Php 1M
loan. Thus, Isaac can still make use of the period
d. No. Gary cannot compel Isaac to immediately pay the loan. Equity dictates that Gary
should have granted a reasonable extension of time for Isaac to deliver his Toyota Innova
It would be unfair and burdensome for Isaac to pay the Php 1M simply because the
promised security was not delivered

35. Which of the following defense is meritorious?

a. An action for recovery of down payment paid under a rescinded oral sale of real property
b. A defense in an action for ejectment that the lessor verbally promised to extend or renew
the lease.
c. An action for payment of sum of money filed against one who orally promised to answer
another's debt in case the latter defaults.
d. A defense in an action for damages that the debtor has sufficient, but unliquidated asset to
satisfy the credit acquired when it becomes due.

For Questions Nos. 36 – 37:

Arlene owns a row of apartment houses in Kamuning Quezon City. She agreed to lease
Apartment No. 1 to Janet for a period of 18 months at the rate of Php 10,000 per month. The
lease was not covered by any contract. Janet promptly gave Arlene two months deposit and
18 checks covering the rental payment for 18 months. This show of good faith prompted
Arlene to promise Janet that should Arlene decides to sell the property, she would give Janet
the right of first refusal.

36. Not long after Janet moved in, she received news that her application for a Master of Laws
scholarship at King's College in London had been approved. Since her acceptance of the
scholarship entailed a transfer of residence. Janet asked Arlene to return the advance rental
payments she made. Arlene refused, prompting Janet to file an action to recover the
payments. Arlene 'filed a motion to dismiss, claiming that the lease on which the action is
based in unenforceable. If you were the judge, would you grant Arlene's motion?
a. Yes. I will grant the motion because the lease contract between Arlene and Janet was not
in writing, hence, Janet may not enforce any right arising from the same contract
b. No. I will not grant the motion because to allow Arlene to retain the advance payment
would amount to unjust enrichment.
c. Yes. I will grant the motion because the action for recovery is premature; Janet should
first secure a judicial rescission of the contract of lease.
d. No. I will not grant the motion because the cause of action does not seek to enforce any
right, under the contract of lease.

7|Page
37. Assume that Janet decided not to accept the scholarship and continued leasing Apartment
No. 1. Midway through the lease period, Arlene decided to sell Apartment No. 1 to Jun in
breach of her promise to Janet to grant her the right of first refusal. Thus, Janet filed an
action seeking the recognition of her right of first refusal, the payment of damages for the
violation of this right and the rescission of the sale between Arlene and Jun. Is Janet's action
meritorious?
a. Yes. Under the Civil Code, a promise to buy and sell a determinate thing is reciprocally
demandable.
b. No. The promise to buy and sell a determinate thing was not supported by a consideration.
c. Yes. Janet right of first refusal was clearly violated when the property was not offered for
sale to her before it was sold to Jun.
d. No. A right of first refusal involves an interest over real property that must be embodied in
a written contract to be enforceable.

38. Which of the following is not included in the attributes of juridical capacity?
a. Juridical capacity is inherent in every natural person and therefore it is not acquired
b. Juridical personality is lost only through death
c. Juridical capacity is the fitness to be the subject of legal relations
d. Juridical capacity cannot exist without capacity to act

39. The following are the requisites of fortuitous event, except

a. Cause is independent of the will of the debtor
b. The event is unforeseeable / unavoidable
c. Occurrence renders it absolutely impossible for the debtor to fulfill his obligation in
normal manner, impossibility must be absolute not partial; otherwise not force majeure
d. Debtor contributed to the aggravation of the injury to the creditor

40. Buko, Fermin and Toti are solidary debtors under a loan obligation of Php 300,000 which
has fallen due. The creditor has, however, condoned Fermin's entire share in the debt. Since
Toti has become insolvent, the creditor makes a demand on Buko to pay the debt. How
much, if any, may Buko be compelled to pay? Solidary kasi. But Fermin may also be compelled to pay.

a. Php 200,000 b. Php 300,000 c. Php 100,000 d. Php 150,000

41. The following are the ways by which innominate contracts are regulated, except
a. By the stipulation of the parties
b. By the general principle of quasi contracts and delicts
c. By the rules governing the most analogous nominate contract
d. By the customs of the place.

8|Page
42. Aligada orally offered to sell his two hectare rice land to Balane for Php 10M. The offer was
orally accepted. By agreement, the land was to be delivered (through execution of a
notarized Deed of Sale) and the price was to be paid exactly one month from their oral
agreement. Which statement is most accurate?
a. If Aligada refuses to deliver the land on the agreed date despite payment by Balane, the
latter may not successfully sue Aligada because contract is oral.
b. If Aligada refused to deliver the land, Balane may successfully sue for fulfillment of the
obligation even if he has not lendered payment of the purchase price
c. The contract between the parties is rescissible
d. The contract between the parties is subject to ratification by the parties

43. Which of the following statements is wrong?

a. Creditors are protected in cases of contracts entered to defraud them
b. Contracts takes effect only between the parties, their assign and heirs, except in case
where the rights and obligations arising from the contract are not transmissible by their
nature, or by stipulation or by provision of law
c. If a contract should contain some stipulation in favor of a third person, he may demand its
fulfillment provided he communicated his acceptance to the obligor before its revocation
d. In contracts creating real rights, third persons who come into possession of the object of
the contract are not bound thereby

44. Which phase most accurately completes the statement - If at the time the contract of sale is
perfected, the thing which is the object of the contract has been entirely lost
a. The buyer bears the risk of loss
b. The contract shall be without any effect
c. The seller bears the risk of loss
d. The buyer may withdraw from the contract

45. Upon winding up of the corporate affairs, any asset distributable to any creditor or
stockholder or member who is unknown and cannot be found shall be escheated and
forfeited in favor of the
Old Corporation Code Revised Corporation Code
a. Barangay where such property is located Province where such property is located
b. Province where such property is located City where such property is located
c. City or municipality where such property is located National government
d. National government City of municipality where such property is located

46. They are contracts that give the buyer the right, but not the obligation, to buy or sell an
underlying security at a predetermined price, called the exercise or strike price, on or before
a predetermined date, called the expiry date, which can only be extended by SEC upon
stockholders' approval
a. Option contract
b. Subscription contract
c. Contract of sale
d. Bond indenture

9|Page
47. A contract of sale between husband and wife is

a. Void, if there is separation of property in the marriage settlement

b. Valid, when there is judicial separation of property
c. Voidable, if they are under the absolute community of property
d. Rescissible, if they are under the conjugal partnership of gains
48. A sold his necklace to B in a public instrument and later orally sold his watch to C. Both
items will be delivered seven days later. On the fifth day, A again sold the same necklace to
D and the same watch to E. Both D and E immediately took physical possession of the
necklace and watch, respectively and both are not aware of the previous sale to B and C.
Who will have a better right to the necklace and watch?
a. B and C
b. D and E
c. B and E
d. C and D

49. A owes B PHP 100,000. A also owes C PHP 100,000. A failed to pay both obligations. B
filed a complaint in court and a writ of attachment was issued against A's land situated in
Manila. Later, A sells his land in Makati to D. Which of the following is not correct?
a. The sale of the land in Makati is presumed fraudulent because a writ of attachment has
been issued
b. C may go to court for the rescission of the sale to D
c. B may go to court for the rescission of the sale to D
d. Neither B nor C can go to court for the rescission of the sale to D because the land in
Makati was not the object of the writ of attachment

50. A has two creditors, B and C, the obligation to B is PHP 10,000 and to C is PHP 12,000.
Later, with the consent of A and B, W pays B PHP 10,000. Now W and C are the
creditors of A. Suppose A has only PHP 12,000, which is correct?
a. C should be preferred
b. W should be preferred
c. C and W should be paid proportionately
d. A may choose whom to pay

51. Which of the following is a valid stipulation?

a. A promises to give B PHP 10,000, and if A fails, A will allow B to have sexual
intercourse with her for one week
b. A will give B PHP 10,000, if C will go to planet Saturn within the year
c. A agreed to give B a house and lot if B will kill A's wife
d. A agreed to put poison on the food of B's wife and if A fails, to pay B PHP 10,000 for
damages

52. A was having his house repaired by B, who needed construction materials, so A orally told
the seller C, "Give B the materials, I shall be responsible. I shall pay in 30 days." C
delivered the materials. As a result, the contract
a. Is unenforceable because A made an oral agreement to answer for the debt of B
b. Is enforceable because A did not make a special promise to answer for the default of
another person
c. Shall be enforceable if there is ratification by A
d. The contract shall be unenforceable if the value is at least PHP 500

10 | P a g e
53. A was the registered owner of a passenger jeepney which was involved in a collision
accident with a delivery truck, resulting in the death of 3 passengers and injuries to four.
At the time of the accident, A was legally married to B but was cohabiting with C in a
relationship akin to that of a husband and wife. The heirs of the dead passengers and the
injured persons sought to recover damages. Which of the following is correct?
a. The liability of A for damages will be on the basis of culpa contractual
b. The liability of A for damages will be on the basis of quasi-delict
c. B is liable to the same extent as A because she is also the owner of the passenger jeepney
d. C is not liable, as the paramour of A, C is not a co-owner

54. The liability of judgment debtor A under an obligation imposed by a final judgment is to pay
PHP 10,000 but A and the judgment creditor B subsequently entered into a contract
reducing the liability of A to only PHP 8,000. Which of the following is correct?
a. There is an implied novation because the existing obligation is extinguished
b. Novation result in the extinguishment of an existing obligation and new one is substituted
in its place
c. The payment by C of the reduced amount was the result of the new obligation
d. The agreement to reduce the judgment debt to PHP 8,000 completely extinguished the
judgment debt and released A from his pecuniary liability

55. In order that consignation shall produce the effect of payment it is not only essential that it
must conform with all the requisites of payment, but it is also essential that certain special
requirements prescribed by law must be complied with. Which of the following is not
correct?
a. There must be a previous tender of payment
b. There is a debt due
c. The thing or amount due had been placed at the disposal of judicial authority
d. The notice previous to and after the consignation has been given to the persons interested
in the fulfillment of the obligation

56. When there is concurrence of two or more creditors or of two or more debtors in one and the
same obligation, the obligation of the debtors and creditors is
a. Both joint and solidary
b. Either joint or solidary
c. Both are joint
d. Both are solidary

57. To constitute a caso fortuito that would exempt a person from responsibility, which of the
following is not necessary?
a. It must be either unenforceable or unavoidable
b. The occurrence must render it impossible for the debtor to fulfil the obligation in a normal
manner
c. The event must be independent of the will of a person
d. The debtor must be free of participation in, or aggravation of, the injury to the creditor

58. When one by his act, representation, oral admission, or by his silence induces another to
believe certain facts to exist and act on such belief, there is estoppel
a. In pais
b. By deed
c. By laches
d. By trust

11 | P a g e
59. If a debtor gives a property to his creditor who accepts it in payment of an obligation in
money, this will be governed by
a. Cession
b. Barter
c. Exchange
d. Sales

60. D owes C PHP 6,000. No date for payment was stipulated by the parties. Which is correct?
naulit
a. C can require D to pay when the period arrives
b. C can require D to pay at anytime
c. D is not liable to C because the obligation is void there being no date of payment
d. D is not required to pay unless C goes to court and asks the court to require D to pay

61. Which of the following statements is true as regards a void contract?

a. A void contract may be ratified by the acceptance by a party to the contract of a benefit
under its terms
b. The right to set up the defense of illegality of a void contract may be waived if the
illegality is not raised within a reasonable time
c. If a void contract is novated by a valid one, such novation is valid
d. The right to set up the defense of illegality of a void contract is imprescriptible

62. It is a contract by virtue of the terms of which the parties thereto promise and obligate
themselves to enter into another contract at a future time, upon happening of certain
events, or the fulfillment of certain conditions
a. Resolutory contract
b. Option contract
c. Suspensive contract
d. Auto contract

63. A sum of money paid, or a thing delivered upon the making of a contract for the sale of
goods to bind the offer, the delivery and acceptance of which makes the final assent of
both parties to the contract
a. Option money
b. Arras
c. Loan
d. Deposit

64. A promised to give B PHP 1,000 if B will hear mass for 10 consecutive Sundays. This is a
a. Civil obligation
b. Natural obligation
c. Moral obligation
d. Religious obligation

65. A promissory note reads "I promise to pay B PHP 100,000 on October 30 2022. Sgd. A." B
transferred the note to C. Later, X stole the promissory note and transferred the note to Y
who received the note in good faith. On maturity date, Y presented the note to A and
demanded payment. A paid the note in good faith. In this case
a. C can recover from A
b. C can recover from B
c. A's obligation is extinguished
d. C can recover only from either X or Y

12 | P a g e
66. Which of the following contracts is not void ab initio?
a. That whose object is outside the commerce of men
b. That who's object did not exist at the time of transaction
c. That which contemplates an impossible service
d. That which is undertaken in fraud of creditors

67. As a rule, when a creditor assigns his credit in good faith

A) He warrants the existence of the credit at the time of assignment
B) He warrants the legality of the credit at the time of assignment
C) He warrants the solvency of the debtor at the time of assignment
a. Only A and C
b. Only A and B
c. Only B and C
d. A, B, and C

68. A granted a loan to B amounting to PHP 660,000 with 6% interest per annum. Such
agreement was not reduced in writing but B paid the obligation and interest in cash and
checks when A demanded payment. Which the following is correct?
a. The payment of loan and interest is valid
b. The payment of loan and interest is void
c. B can demand the return of the amount representing the interest paid
d. The principle of solution indebiti is applicable, hence B can recover the amount paid to A

69. It is a principle which holds that contracts must be binding to both parties and its validity and
effectivity cannot be left to the will of one of the contracting parties
a. Obligatory force of contracts
b. Mutuality of contracts
c. Autonomy of contracts
d. Relativity of contracts

70. Which of the following statements is not correct?

a. If A gives his ring to B but it is not clear whether A donated it or merely lent it, the
contract should be interpreted as commodatum rather than a donation
b. If A sells his car to B but A has four cars and it cannot be determined which car was sold,
the contract of sale is void
c. A borrowed PHP 100,000 from B which bears interest at 12% per year but there is doubt
whether it is payable in two or three years, the period of payment shall be interpreted at
2 years
d. A engaged the services of B but the contract did not indicate the amount of compensation
to be paid, the amount thereof shall be the rate that is customarily paid in the place
where the services were rendered
71. X, a bride to be, rented a car from Y Car Rentals to bring her to the church on August 10,
2022, her wedding day. On wedding day, X did not make any demand. The car and driver
assigned were nowhere to be found on the scheduled day. Is Y Car Rentals in delay?
a. No. No demand, no delay
b. Yes, time is of the essence
c. No, only the driver is in delay
d. Yes, wedding will not proceed in the absence of the wedding gown

13 | P a g e
72. The following contracts are qualified for reformation, except
a. Onerous contract
b. Gratuitous contract
c. Remuneratory contract
d. Consensual contract

73. A promised to deliver to B 100 sacks of palay from the former's 2022 summer harvest. A
failed to deliver what was promised due to floods which destroyed the crops before
harvest season. Is the obligation extinguished?
a. No, generic things do not perish
b. No, A can still raise the same from future crops
c. Yes, the generic thing is delimited
d. Yes, the contract is void due to non-existing object at the time of perfection of contract

74. D is obligated to give E, at E's option, his rolex watch, or his cross ball pen, or his diamond
ring. The diamond ring was forcibly taken by a robber and the watch by a snatcher. After
D lost the watch and ring, the ball pen likewise could not be located despite diligent
efforts to find the same. D could no longer remember where he kept the pen. Hence, D
failed to deliver any of the three items he promised. Is the obligation of D to E
extinguished?
a. No, E can demand the value of anyone of the three items since he has the right of choice
b. No, E can demand the value of the last thing lost
c. Yes, fortuitous loss extinguishes all the alternative obligations
d. Yes, nothing remains practicable

75. When the fulfillment of the valid suspensive condition depends upon the sole will of the
debtor
a. The obligation is valid but the condition is disregarded
b. Both the condition and obligation will be void
c. Both the condition and obligation will be valid
d. The obligation shall be void but the condition is valid

76. In 2022, A promise to give to B his land if B passes the CPA board examination in 2023. If
the condition is fulfilled, does A give the fruits for the period of 1 year?
a. Yes, in obligation to give, once the condition is fulfilled the obligation shall retroact to the
day of the constitution of the obligation
b. Yes, the creditor shall appropriate the fruits and interest, unless there is contrary intent
c. No, if the obligation is unilateral, the debtor shall appropriate the fruits and interest unless
there is contrary intent
d. A and B will divide the fruits equally

77. A and B mutually promised orally to marry each other while they were in Mang Telmo's
place. The agreement between A and B is
a. Unenforceable, because the agreement was not made in writing
b. Unenforceable, because Mang Telmo's place is not the proper place to make a promise
c. Enforceable, because this is not covered by the Statute of Frauds
d. Enforceable, and therefore A may compel B to marry her

14 | P a g e
78. In distinguishing earnest money from option money. Option money is
a. Given when there is a contract of sale
b. Given only when there is a perfected contract of sale
c. Given to bind the offeror in a unilateral promise to sell or buy
d. Given as part of the purchase price

79. Rescission as distinguished from annulment

a. The defect is intrinsic
b. The basis is lesion
c. This is a sanction
d. Damage to the plaintiff is immaterial

80. A, in his will, gave some property to B, provided that C would die within five years. This is a
(an)
a. Pure obligation
b. Obligation with a resolutory condition
c. Obligation with a suspensive condition
d. Obligation with a period

The End

15 | P a g e