Accountancy Review Center (ARC)

of the Philippines Inc.

One Dream, One Team

STUDENT HANDOUTS
TAXATION M.V.U.SIA/E.D.TABAG
1st PREBOARD OCTOBER 2021 CPALE REVIEW

BASIC PRINCIPLES 6. Which statement gives the correct answer? That a

1. The President of the Philippines and the Prime Minister of feasibility study needs to look into the taxes of different
Japan entered into an executive agreement in respect of a political subdivisions of government which may be
loan facility to the Philippines from Japan whereby it was alternative sites of the business because
stipulated that interest on loans granted by private a. Provinces, cities and municipalities must have uniform
Japanese financial institutions in the Philippines shall not be taxes between and among themselves
subject to Philippine income taxes. What basic, b. The local taxes of a political subdivision need not be
characteristic of taxation has been violated by this uniform with the local taxes of another political
agreement? subdivision
a. inherent limitation c. Business that are to national taxes are exempted from
b. legislative in character local business taxes
c. theoretical justice d. Local business taxes may be credited against national
d. administrative feasibility business taxes

2. When the refund of a tax supposedly due to the taxpayer has ESTATE TAX
already been barred by prescription, and the said taxpayer 7. In 2015, Sonny gave a loan of P1,500,000 to Rona, his best
is assessed with a tax at present, the two taxes may be set- friend. In 2018, as an act of generosity, Sonny condoned the
off with each other. This doctrine is called debt of Rona in his last will and testament. Sonny died in
a. Set-off doctrine 2021. The condonation of the debt of Rona is:
b. Tax sparing doctrine a. A donation inter-vivos subject to donor's tax
c. Doctrine of reciprocity b. A payment or compensation for the services rendered
d. Equitable recoupment c. A deduction from the gross estate of Sonny
d. A donation mortis causa subject to estate tax
3. In case of inconsistency between a law and a revenue
regulation, which will prevail? 8. A resident alien decedent left a gross estate amounting to
a. Law P5,000,000, which of the following statements is correct?
b. Revenue Regulation a. The estate may be liable to estate tax.
c. Either “a” or “b” whichever is favorable to the taxpayer b. The estate may not be liable to estate tax.
d. Either “a” or “b” whichever is favorable to the c. The estate is absolutely not liable to estate tax.
government d. The estate is absolutely liable to estate tax.

4. Which of the following statements is incorrect pertaining to 9. Which of the following will not form part of claims against
tax exemption of properties for religious, charitable and the estate?
educational purposes? a. Unpaid funeral plan at the time of death
a. Exemptions of religious, charitable and educational b. Unpaid medical expenses at the time of death
institutions applies to real property tax and income tax c. Both “a” and “b”
only. d. Neither “a” nor “b”
b. In case of property tax exemption, the test is usage, not
ownership. 10. A person called to succession either by the provision of a
c. The word “exclusive” means primarily rather than will or by operation of law.
solely. a. Successor c. Devisee
d. What is exempted is not the institution itself but the b. Heir d. Legatee
lands, buildings and improvements actually, directly
and exclusively used for religious, charitable and 11. One of the following is not a requisite for deduction from
educational purposes. gross estate of losses.
a. Losses are incurred during the settlement of the estate
5. Bank A is subject to the gross receipts tax on its interest arising from fires, storms, shipwreck, or other
income on loan transactions to customers and at the same casualties, or from robbery, theft or embezzlement.
time such income is subject to income tax. Which statement b. Losses are not compensated for by insurance or
below INCORRECTLY describes the transaction? otherwise.
a. There is double taxation because two taxes – income c. Losses have been claimed as a deduction for the income
tax and gross receipts tax are imposed on the interest tax purposes in an income tax return.
income described above, and double taxation is d. Losses are incurred not later than the last for the
prohibited under the 1987 Constitution. payment of the estate tax.
b. There is no double taxation because the first tax is
income tax, while the second is a business tax. 12. Which of the following taxes is not deductible from the
c. Income tax on interest income of deposits of Bank A is gross estate?
a direct tax, while GRT on interest income on loan a. Income tax paid on income received before death
transaction is an indirect tax. b. Property tax accrued prior to death
d. None of the choices c. Estate tax paid to a foreign country
d. Donor's tax accrued prior to death

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d. Within five (5) years from the statutory due date

13. Elle, Filipina, died in the United States with the following
properties: QUESTIONS 20-25
Condominium unit in New York City P20,000,000 20. Ms. Inah Taque, a resident alien married to a Filipino, died
Shares of stock in a foreign corporation 6,000,000 leaving the following:
Interest in a partnership, domestic 4,750,000 Family home (500 sq. meters, zonal value P19,000,000
Bank deposit in a New York City bank 1,550,000 is P50,000 per square meter)
Car in Cebu, donated inter vivos 5 years Bank deposit (50% subjected to 6% final 5,000,000
ago to her son 2,000,000 tax)
Life insurance proceeds, beneficiary is the 4,000,000
Which should be included in her gross estate? wife who is the executor, designation is
a. All of the above properties irrevocable
b. Only the properties located in the Philippines Life insurance proceeds, beneficiary is his 2,000,000
c. All of the above properties except the car son, designation is irrevocable
d. The properties located in the Philippines except the Donation to the City of Tacloban made in 1,000,000
intangibles the will
Claims against an insolvent debtor (40% 1,500,000
14. The following properties will be classified uniformly under uncollectible)
Conjugal Partnership of Gains and Absolute Community of Funeral expenses (P300,000 still unpaid at 850,000
Property, except: the time of death)
Judicial expenses 460,000
a. Property inherited or received as donation during the
Medical expenses (55% paid at the time of 1,200,000
marriage
death)
b. Property acquired from labor, industry, work or
profession of spouses How much is the exclusive gross estate?
c. Fruits or income due or derived during the marriage a. P1,000,000 c. P16,500,000
coming from common properties b. P33,000,000 d. none of the choices
d. Fruits or income due or derived during the marriage
coming from exclusive properties 21. How much is the common gross estate?
a. P1,000,000 c. P16,500,000
b. P33,000,000 d. none of the choices
15. The following deductions are also part of the gross estate,
except:
22. How much is the exclusive deduction?
a. Claims against the estate
a. P1,000,000 c. P600,000
b. Claims against insolvent persons
b. P1,440,000 d. P720,000
c. Transfer for public use
d. Death benefits under Republic Act. 4917
23. How much is the common deduction?
a. P1,000,000 c. P400,000
16. One of the following is included in the gross estate b. P1,440,000 d. P720,000
a. Benefits received from GSIS
b. Benefits received from U.S. Veterans Administration 24. How much is the special deduction?
c. Benefits received from damages during World War 2 a. P14,500,000 c. P15,000,000
d. Benefits received from a tax-exempt employer as a b. P24,000,000 d. none of the choices
consequence of death of the employee
25. How much is the estate tax payable?
17. D borrowed 10,000,000 from Bank C which remained a. P76,800 c. P46,800
unpaid at the time of death. The heirs negotiated with the b. P226,800 d. zero
Bank to settle the loan for P7,000,000 only due to financial
constraints. How much can be claimed as deduction by the QUESTIONS 26-28
estate of D in the determination of estate tax liability? Donald Trunk, a married American residing in Florida U.S.A.,
a. P3,000,000 c. P7,000,000 died in 2021 leaving the following assets in the Philippines:
b. P10,000,000 d. zero a. Shares of stocks in Ayala Land Corp. with cost of P3,500,000
and unrealized gain of P500,000 at the time of death.
18. When the Commissioner finds that the payment of the b. Ordinary unlisted shares with book value amounting to
estate tax or of any part thereof would impose undue P1,800,000 and par value of P1,500,000.
hardship upon the estate or any of the heirs, he may extend c. Preferred unlisted shares with book value amounting to
the time for payment. Which of the following cases will not P900,000 and par value of P600,000.
be a sufficient ground for the Commissioner to deny the d. Condominium in Trump Tower costing P6,000,000 but with
request for extension? zonal value amounting to P9,000,000 and fair market value
a. Simple negligence per real property tax declaration of P7,000,000. It has
b. Gross negligence unpaid mortgage amounting to P1,600,000 at the time of
c. Intentional disregard of rules and regulations death.
d. None of the choices
The gross estate abroad of the deceased is equivalent to 80% of
19. If the estate is settled judicially, the allowed extension for the total gross estate worldwide.
filing is:
a. Within 30 days from the statutory due date 26. How much is the total gross estate to be reported in the
b. Within six (6) months from the statutory due date Philippines?
c. Within two (2) years from the statutory due date a. P15,40,000 c. P14,900,000

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b. P15,700,000 d. P15,200,000 P700,000 at the time when its fair market value was
P1,000,000. It was agreed between the parties that as long
27. How much is the total ordinary deductions? as the seller lives, he shall be entitled to the dividends. After
a. P1,600,000 c. P320,000 two years from the date of sale, Mr. Hinada died. The fair
b. P6,600,000 d. P1,320,000 market value of the shares at that time is already
P1,500,000. Other than Japan (Head Office), UCC Corp. only
28. How much is the net taxable estate? operates in Singapore, Korea, France, United Kingdom and
a. P7,040,000 c. P7,540,000 USA.
b. P14,580,000 d. P15,080,000
Based on the above data, which of the following
DONOR’S TAX statements is correct?
29. Which of the following statements is correct? a. The sum of P300,000 shall be subject to donor’s tax.
a. The donor’s tax shall be 6% computed on the basis of b. The estate of Mr. Hinada will include P800,000 in the
the total gifts. computation of gross estate.
b. Any contribution in cash or in kind to any candidate, c. The above transaction may be subject to donor’s tax or
political party or coalition of parties for campaign estate tax upon the election of Mr. Hinada or the
purposes shall be governed by TRAIN Law. executor or administrator of his estate.
c. The donor’s tax is not a property tax , but is a tax d. The above transaction is neither subject to donor’s tax
imposed on the transfer of property by way of gift nor estate tax.
inter vivos.
d. All of the choices. PERCENTAGE TAX
37. Mr. Paquito Walhotoy is the owner of a small variety store.
30. What is the formal requirement in-order for the donation His gross sales in any one year does not exceed
of an immovable may be valid? P3,000,000. He is not VAT-registered. The following data
a. It must be in writing. are taken from the books of the variety store for the
b. It must be in a public document. quarter ending March 31, 2021:
c. There must be simultaneous delivery Merchandise inventory, March 31, 2021 P 100,000
d. There is no formal requirement Gross sales 450,000
Purchases from VAT-registered 350,000
31. The transfer of property by gift is completed when? suppliers
a. the moment the donor knows of the acceptance by the
donee. How much is the percentage tax due and payable?
b. the moment it is delivered, either actually or a. P16,500 c. P3,000
constructively b. P13,500 d. P4,500
c. either “a” or “b” whichever comes first
d. neither “a” nor “b” 38. Tubigan ni Juan Inc. is authorized to engaged in the
business of a water utility pursuant to a franchise duly
32. Renunciation by the surviving spouse of his/her share in issued by the Government. Its gross receipts of the
the conjugal partnership or absolute community after the preceding year exceeded the 10 million pesos. What
dissolution of the marriage in favor of the heirs of the business tax will apply to Tubigan ni Juan Inc. in the
deceased spouse or any other person/persons is: present year?
a. subject to donor’s tax a. Value-added tax
b. subject to donor’s tax if the renunciation is general b. Percentage tax
c. subject to donor’s tax if the renunciation is specific c. Value-added tax or percentage tax at the option of
d. subject to estate tax Tubigan ni Juan Inc.
d. Value-added tax or percentage tax at the option of the
33. When is the deadline for filing the donor’s tax return Bureau of Internal Revenue (BIR)
reckoned from the date the gift is made or completed?
a. 1 year c. 3 months 39. A purely cooperative company doing life insurance
b. 6 months d. 30 days business is subject to what kind of business tax?
a. Value-added tax
34. Where property, other than real property subject to 6% b. Percentage tax
capital gains tax, is transferred for less than an adequate c. Value-added tax or percentage tax depending on the
and full consideration in money or moneys’ worth, then: gross receipts for the year
a. It is subject to donor’s tax regardless of circumstances d. Exempt from Value-added tax and Percentage tax
b. It is subject to donor’s tax if with donative intent
c. It is not subject to donor’s tax regardless of 40. Manny Pacquiao fought Floyd Mayweather Jr. in Legazpi
circumstances City, Philippines for the vacant World Boxing Council
d. It is subject to 15% capital gains tax Welterweight Title. The showdown was titled Lindol sa
Bicol wherein Manny sent Floyd to the canvass on the 12th
35. Which of the following gifts is not exempt? round, the latter’s first defeat in his entire career. The fight
a. Gifts made to or for the use of the National was promoted by Top Rank Promotions, 60% owned by
Government Bob Arum and other Americans, and 40% owned by Dean
b. Gifts made to or for the use of the Local Government Bobads. The event generated the following staggering
c. Dowry revenues:
d. Gifts in favor of an educational institution Admission Fees P10,000,000
Pay per view 100,000,000
36. Mr. Hinada, a Japanese citizen residing in Osaka, sold his Expenses 50,000,000
shares of stock in UCC Corp. to Ms. Japlos, a Filipina, for

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How much percentage tax is due on the above revenues? VAT

a. P11,000,000 c. P10,000,000 46. Which of the following is not subject to value-added tax?
b. P1,000,000 c. P6,000,000 a. A resident citizen who performs services in the
Philippines, the performance of services is not regular.
41. Which of the following franchise grantees is subject to the b. A non-stock, non-profit private organization engaged in
franchise tax? trade or business.
I. Franchise on radio and/or television broadcasting c. A government owned or controlled corporation
companies the annual gross receipts in the engaged in trade or business.
preceding year exceeds P10,000,000. d. A non-resident foreign person who performs services
II. Franchise on gas and water utilities. in the Philippines, the performance of services is not
III. Franchise on toll road operations. regular.
IV. Franchise granted to PLDT
a. I only c. II and III only 47. Rommel is an operator of taxi cabs. During a particular
b. II only d. All of the above month, he purchased from Mahindra, a VAT-registered car
dealer, 10 sedan type units for a total selling price of 5
42. Banco de Uro Inc. has the following data for the first million pesos. The estimated useful life of each vehicle is
quarter of the current year: four (4) years. How much will be the amount due from
Interest, commissions and discounts P5,000,000 Rommel?
from lending activities (remaining a. P5,600,000 c. P5,150,000
maturity of instrument is 5 years) b. P5,000,000 d. P4,480,000
Income from financial leasing 3,000,000
(remaining maturity of instrument is 48. Based on the preceding number, how much input tax can be
more than 5 years) claimed by Rommel?
Dividends and equity shares in net 1,000,000 a. P600,000 c. P150,000
income of subsidiaries b. P12,500 d. zero
Rentals of properties 500,000
Net trading gains within the taxable year 300,000 49. Leomar Cabarles is a well-known author in Financial
on foreign currency Accounting and Auditing Problems. His revised book in
Financial Accounting contained a one-page advertisement
How much is the gross receipts tax? promoting ARC as one of the leading review centers in the
a. P336,000 c. P320,000 country. What will be the tax treatment of the sale of e-
b. P330,000 d. P288,000 books for VAT purposes if the transaction happened after
the effectivity of CREATE?
43. Which of the following percentage taxes cannot be claimed a. Subject to 12% VAT
as deduction in computing taxable income? b. Subject to 0% VAT
a. Gross Receipts Tax c. Exempt from VAT
b. Common Carrier’s Tax d. Exempt from VAT but subject to percentage tax.
c. Overseas Communications Tax
d. Stock Transactions Tax 50. The VAT-registered purchaser in a transaction where a
seller who is not VAT-registered issues an invoice or receipt
44. Sigurista Insurance Co. collected premiums on variable showing his TIN, followed by the word "VAT":
contracts (as defined in Sec. 232(2) of Presidential Decree a. shall recognize as an input tax credit the "passed-on
No. 612) in excess of the amounts necessary to insure the VAT" provided the requisite information required
lives of the variable contract workers. Which of the under the Regulations is shown on the invoice or
following statements is correct? receipt.
a. To the extent necessary to insure the lives of the b. shall be liable to the percentage taxes applicable to the
variable contract workers, it is subject to 2% transaction.
premiums tax. c. shall claim a refund for the erroneous VAT provided
b. Management fee related to Variable Unit Link is the requisite information required under the
subject to VAT Regulations is shown on the invoice or receipt.
c. Both “a” and “b” d. none of the choices.
d. Neither “a” nor “b”
51. A taxpayer decided to cancel its vat-registration at the time
45. Which of the following is not subject to 2% Premiums Tax? when it has unused input tax. What is the available
I. Premium on Health and Accident Insurance remedy?
II. Income earned by the life insurance company a. Apply for the issuance of tax credit certificate or
from services which can be pursued refund within two (2) years from the date of
independently of the insurance business activity cancellation of VAT registration, at the option of the
III. Investment income earned by the life insurance taxpayer.
companies from investing the premiums received b. Apply for issuance of tax credit certificate within two
IV. Investment income realized from the investment (2) years from the date of cancellation of VAT
of funds obtained from others, if these investment registration, however, he shall only be entitled for
activities have been allowed and approved by the refund if he has no internal revenue tax liabilities.
Insurance Commission c. Apply for the issuance of tax credit certificate or
a. II only refund within two (2) years from the quarter in which
b. II, III and IV the unused input tax was sustained, at the option of
c. II and IV the taxpayer.
d. I, II and IV d. Apply for issuance of tax credit certificate within two
(2) years from the quarter in which the unused input

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tax was sustained, however, he shall be entitled for

refund only if he has no internal revenue tax liabilities. 59. Based on the preceding number, how much input tax can
be claimed by the buyer against input in the month of
QUESTIONS purchase?
JJ Sugar Inc. is a VAT-registered manufacturer of sugar. It has a. P7,200,000 c. P4,800,000
the following data for month of January 2021: b. P2,480,000 d. P2,400,000
Local sales of refined sugar to private entities P 3,000,000
Local sales of refined sugar to Government 1,000,000 60. Pilipinas Shell sold fuel to an international shipping carrier
Export sales of refined sugar 1,000,000 whose voyage is from a port in the Philippines directly to a
Local sales of muscovado 1,000,000 foreign port without docking or stopping at any other port
Purchases of sugar cane 3,000,000 in the Philippines. What is the treatment of the transaction
Purchases of packaging materials from VAT 500,000 for VAT purposes?
suppliers a. Exempt
Purchases of capital goods from VAT- 1,500,000 b. Zero-rated transaction
suppliers, useful life is 6 years c. Subject to 12% VAT
d. Either “b” or “c”
52. How much is the output tax?
a. P720,000 c. P600,000 61. When is the deadline for manual filing of the quarterly VAT
b. P480,000 d. P360,000 return?
a. Ten (10) days from the end of the quarter
53. How much is the standard input tax? b. Twenty (20) days from the end of the quarter
a. P120,000 c. P50,000 c. Twenty-five (25) days from the end of the quarter
b. P70,000 d. zero d. Thirty (30) days from the end of the quarter

54. How much is the creditable input tax? 62. When a VAT-registered person retires from business, all
a. P222,500 c. P192,000 goods on hand, whether capital goods, stock in trade,
b. P183,000 d. P152,500 supplies or materials as of the date of such retirement shall
be considered sold. The value-added tax shall be computed
55. How much is the final withholding VAT? based on:
a. P120,000 c. P50,000 a. Cost
b. P70,000 d. zero b. Fair market value
c. Cost or net realizable value whichever is higher
56. How much is the VAT Payable? d. Cost or net realizable value whichever is lower
a. P327,500 c. P277,500
b. P288,000 d. P168,000 63. Abel Corporation is a merchandising concern and has an
inventory of goods for sale amounting to Php 1 million. Nel
57. CHPA Residences Inc. is a domestic corporation engaged in Corporation, a real estate developer, exchanged its real
real estate business. It has the following data for the last estate properties for the shares of stocks of Abel
quarter of 2020: Corporation resulting to the acquisition of corporate
control. The inventory of goods owned by Abel
Corporation (Php 1 million worth) is:
Installment Sale of a Townhouse:
a. Subject to 12% VAT
Realized gross profit (GPR is 30%) P300,000
b. Subject to 0% VAT
Gross selling price 4,000,000
c. Exempt from VAT
Zonal value 5,000,000
d. Subject to percentage tax
Deferred Sale of a Parking Lot:
Gross selling price 1,000,000
64. Based on the preceding number, the exchange of real
Fair market value 1,500,000
estate properties held for sale or for lease, for shares of
Rental income 800,000
stocks is:
Rent receivable, beg. 300,000
a. Subject to 12% VAT
Rent receivable, end 100,000
b. Subject to 0% VAT
Importation of materials used in the 2,625,000
c. Exempt from VAT
construction
d. Subject to percentage tax
How much is the VAT due or payable?
65. Casa Leticia, VAT registered, is engaged in hotel business.
a. P285,000 c. P135,000
It had the following selected information from its records
b. P261,000 d. P111,000 for the month of December 2020:
Service Revenue Php500,000
58. A.M. Yu & Associates, a VAT-registered Firm, sold its office Unearned Revenue, 12-31-2020 20,000
building together with the lot thereon to Cabarles, Ong, Sia, Purchases from VAT registered entities:
Tabag & Co., another VAT-registered Firm, for 60million Goods (30% still unpaid) 150,000
pesos. Of the total selling price, 40 million pesos pertains Services (20% still unpaid) 200,000
to the building. The useful life of the building is estimated Importation of generator with useful life
to be 30 years. The transaction happened in 2020. of 7 years:
Dutiable value 1,200,000
Assuming the buyer paid in lump sum, how much output Customs duties 100,000
tax should be paid by the seller in the month of sale? Excise tax 50,000
a. P7,200,000 c. P4,800,000 Other charges within the Bureau of 50,000
b. P2,480,000 d. P2,400,000 Customs

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Facilitation fee 20,000 efficient between selling locally or abroad. If she asks you
which the better option is, what will you advise?
How much is the output tax? a. Sell the catches abroad unprocessed.
a. P62,400 c. P60,000 b. Register under the VAT system and process the
b. P57,600 d. none of the choices catches before selling abroad.
c. Find a local market and sell it unprocessed.
66. How much is the VAT paid to the Bureau of Customs? d. Register under the VAT system, find a local market and
a. P170,400 c. P168,000 sell it after processing.
b. P2,800 d. P2,840
70. TodoCare Inc., an HMO, collected 10million pesos, net of
67. How much is the creditable input tax? VAT, for the quarter broken down as follows:
a. P44,800 c. P34600 Service fee 20%
b. P40,000 d. P40,040 earmarked and actually 80%
spent for medical
68. How much VAT did the Company remit to the BIR? utilization of its members
a. P12,800 c. P22,360
b. P20,000 d. P22,400 How much is the output tax for the quarter?
a. P240,000 c. P960,000
69. Mikylla is planning to enter into fishing business. She b. P1,200,000 d. nil
expects to have substantial amount of VAT on Importation
for the ship and other equipment that she will need for the
business. She is contemplating on whether to sell it raw or
have it processed. Also, she is weighing which is more tax

- END -

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 Accountancy Review Center (ARC)
of the Philippines Inc.
One Dream, One Team
STUDENT HANDOUTS

REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS ATTY. JOHNSON A.H. ONG

RFBT - 1st Pre Board Exam – May 2021 MAY 2021 CPALE REVIEW

1. A contract of commodatum has the following essential a. valid, because the event is sure to come.
elements: b. valid, the obligation is conditional.
a. consent of the contracting parties, object certain and c. valid, but disregard the condition.
cause or consideration. d. void, not legally possible.
b. consent of the contracting parties, object certain, cause 10. The following must be present in order for the debtor to
or consideration and delivery of the object. exempt liability for a breach of an obligation by a fortuitous
c. consent of the contracting parties, object certain, cause event:
or consideration and formalities required by law. a. The cause of the breach of the obligation must be
d. consent of the contracting parties, object certain, independent of the will of the debtor;
delivery of the object, and formalities required by law. b. The event must be either unforseeable or unavoidable;
2. This defective contract cannot be cured by ratification? c. The event must be such as to render it impossible for
a. Rescissible contract the debtor to fulfill his obligation in a normal manner.
b. Void contract d. Demand by the creditor whether express or implied.
c. Voidable contract 11. 1st Statement: Fulfillment of the suspensive condition
d. Unenforceable contract extinguished the obligation.
3. There will be no legal delay in this kind of obligation. 2nd Statement: The general rule is that the debtor can
a. Positive personal obligation exempt himself from the performance of the obligation by
b. Obligation to deliver a determinate thing paying the penalty.
c. Obligation to deliver an indeterminate thing a. First statement is true; second statement is false.
d. Negative personal obligation b. First statement is false; second statement is true.
4. On August 5, 2021, Nyca wrote Jona a letter, offering to sell c. Both statements are true.
his only house and lot in Barangay Pio Del Pilar Makati City d. Both statements are false.
for P15,000,000 and the letter of offer was received by Jona 12. Karen, an art collector, promised Henry, an art student, that
on August 10, 2021. On August 11, 2021, Jona wrote a letter if Henry could obtain certain rare artifacts within two
of acceptance, which was received by Nyca on August 16, weeks, Karen would pay for Henry’s postgraduate
2021. The contract is perfected on education. At considerable effort and expense, Henry
a. August 10, 2021 obtained the specified artifacts within the two-week period.
b. August 11, 2021 When Henry requested payment, Karen refused. Karen
c. August 16, 2021 claimed that there was no consideration for the promise.
d. August 11 or 16, 2021 at the option of Nyca Henry would prevail against Karen based on
5. Which of the following is not an obligation with a period? a. Unilateral contract.
a. "Payable soonest" b. Unjust enrichment.
b. “An obligation payable little by little” c. Public policy.
c. “When my means permit me to do so” d. Quasi contract.
d. “If X die of pneumonia” 13. The following contracts may be ratified, except:
6. Which of the following is consensual contract? a. A contract of lease between a minor and an insane
a. Contract of partnership with capital contribution of b. A contract of loan between a minor and a capacitated
real property amounting to P1,000,000. person
b. Donation of house and lot c. A contract of sale entered into by a guardian on behalf
c. Stipulation of interest in simple loan of his ward when the ward whom he represents
d. Contract of agency suffered a lesion of more than ¼.
7. Which of the following is not really a mode of d. A contract of sale involving a future inheritance
extinguishment of obligation? 14. The Judicial cost as a rule, are chargeable to
a. Payment c. Compensation a. The plaintiff
b. Confusion of right d. Novation b. The defendant
8. Statement 1. Penal clauses, being the product of agreement c. Equally between the plaintiff and the defendant
between the parties, may not be reduced or mitigated by d. The losing party
the courts under all circumstances. 15. In a written contract of sale between S and B the true
Statement 2. D owes C P20,000.00 to secure the payment of intention of the parties was not incorporated due to the
which D pledged a diamond ring. Subsequently, this ring mistake of S but where B acted in bad faith. Assume that
was voluntarily returned to D by C. The obligation of D to there was a meeting of the minds between S and B. Who can
pay C P20,000. is impliedly condoned and therefore bring the action for reformation?
extinguished. a. B only c. Both S and B
a. Both are true b. S only d. Neither S nor B
b. Both are false 16. Three of the following statements are true. Which one is
c. No. 1 is true; No. 2 is false false?
d. No. 1 is false; No. 2 is true a. Not only the parties, but their heirs and assigns are
9. "I'll give you my car one year after your death." The obliga- bound by their contract.
tion is

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Accountancy Review Center (ARC) of the Philippines Inc. (ATTY. ONG – OCT 2021)

b. Obligations arising from contracts have the force of law following cases except
between the contracting parties and must be complied a. Depositum
with in good faith. b. Obligation of a depositary
c. Fraud committed in the performance of an obligation c. Mutuum
gives the injured party the right to annul the contract. d. Commodatum
d. Generally, the debtor is not liable for the non- 24. D asked C if the latter can grant him loan of P100,000
performance of his obligation due to fortuitous event. payable in one year plus 12% interest and C nodded his
17. M, as the maker of a promissory note, promised to pay P, head. The contract of loan is in the stage of:
payee, P1,000,000 on or before August 15, 2021. The a. Preparation c. Consummation
benefit of the period belongs – b. Perfection d. Termination
a. To M only c. To both M and P 25. Noli agreed orally with Troy to sell his specific house and
b. To P only d. Neither to M and P lot for P1,00,000. Troy sent Noli a signed agreement and a
18. A, B, C, D, E and F solidary liable to G in the amount of downpayment of P100,000. Noli did not sign the
P300,000. Later in an agreement with B, C, D, E and F, the agreement, but allowed Troy to move into the house. Before
debt was reduced by G to P250,000. G sued A. Because of closing of the sale, Noli refused to go through with the sale.
the partial remission, A was made to pay only P250,000. Troy sued Noli to compel specific performance. Under the
How much can A recover from the other solidary debtors? provisions of the Statute of Frauds
a. 1/6 of P300,000 from each plus interest from the time a. Train will win because Train signed the agreement and
of payment. Nolan did not object.
b. 1/6 of P250,000 from each plus interest from the time b. Train will win because Train made a downpayment and
of payment. took possession.
c. 1/5 of P300,000 from each plus interest from the time c. Nolan will win because Nolan did not sign the
of payment. agreement.
d. 1/5 of P250,000 from each plus interest from the time d. Nolan will win because the house was worth more than
of payment. P500.
19. Which of the following is void? 26. Anna, who was sixteen years old, purchased an P80,000
a. Obligation with resolutory condition wherein the computer from Elsa Electronics. On several occasions Anna
fulfillment of the condition depend upon the sole will of returned the computer to Elsa for repairs. Anna was very
the debtor unhappy with the computer. Two days after reaching the
b. Obligation with resolutory condition wherein the age of eighteen, Anna was still frustrated with the
fulfillment of the condition depend upon the will of the computer’s reliability, and returned it to Elsa, demanding
creditor. an P80,000 refund. Elsa refused, claiming that Anna no
c. Obligation with suspensive condition wherein the longer had a right to disaffirm the contract. Elsa’s refusal is
fulfillment of the condition depend upon the sole will of a. Correct, because Anna’s multiple requests for service
the debtor acted as a ratification of the contract.
d. Obligation with suspensive condition wherein the b. Correct, because Anna could have transferred good title
fulfillment of the condition depend upon the will of the to a good-faith purchaser for value.
creditor. c. Not correct, because Anna disaffirmed the contract and
20. It is the right of the active subject to demand performance the action for annulment is not prescribe.
to a definite passive subject? d. Not correct, because Anna could disaffirm the contract
a. Jus ad rem c. Jus in re at any time.
b. Real right d. jus utendi 27. Statement 1. The loss or destruction of the substitute
21. X University granted Mr. Cui scholarship but required the through the fault of the debtor in a facultative obligation
latter to sign voluntary a contract which reads as follows: renders him liable to the creditor for damages.
“In consideration of the scholarship granted to me by X Statement 2. Penal clauses, being the product of agreement
University, I hereby waive my right to transfer to another between the parties, may not be reduced or mitigated by
school without having refunded to the University the the courts under all circumstances.
equivalent of my scholarship cash. Sgd (Mr. Cui). The a. Both are true
agreement between X university and Mr. Cui is b. Both are false
a. Void being contrary to Moral c. No. 1 is true; No. 2 is false
b. Void being contrary to public policy d. No. 1 is false; No. 2 is true
c. Valid because the contract has the force of law between 28. Statement 1. A third person who has an interest in the
the contracting parties and it must be complied with in fulfillment of the obligation can compel the creditor to
good faith. accept his payment.
d. Valid. X University may compel Mr. Cui to pay damages Statement 2. D owes C P20,000.00 to secure the payment of
in case of breach. which D pledged a diamond ring. Subsequently, this ring
22. Crimson Corp., a retail chain, asked Alberto Construction to was voluntarily returned to D by C. The obligation of D to
fix a broken window at one of Crimson’s stores. Alberto pay C P20,000. is impliedly condoned and therefore
offered to make the repairs within three days at a price to extinguished.
be agreed on after the work was completed. A contract a. Both are true
based on Alberto’s offer would fail because of b. Both are false
indefiniteness as to the c. No. 1 is true; No. 2 is false
a. Price involved. d. No. 1 is false; No. 2 is true
b. Nature of the subject matter. 29. Which of the following is principal contract
c. Parties to the contract. a. Guaranty c. Pledge
d. Time for performance. b. Chattel mortgage d. Deposit
23. Compensation is not proper when the debts arise in the

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Accountancy Review Center (ARC) of the Philippines Inc. (ATTY. ONG – OCT 2021)

30. Statement I. The contract does not become voidable if the a. shall be liable for damages only if he is a party to the
violence or intimidation was done by persons not party to same contract.
the contract. b. shall be liable for damages to the other contracting
Statement II. D is indebted to C for the delivery of a house party.
and lot. C orally condoned the same which was accepted by c. shall not be liable for damages to the other contracting
D. The obligation of D to C is extinguished. party.
a. Both statements are true d. shall not be liable for damages if the parties are in pari
b. Both statements are false delicto.
c. Statement I is true but statement II is false 39. A bought 100 box of ballpen at P1,500 per box from B.
d. Statement I is false but statement II is true However the contract mistakenly showed a total contract
31. Statement I. All obligations are contracts price of P200,000 because of arithmetical computation.
Statement II. An action to annul a voidable contract Which of the following statement is correct?
generally prescribes in four (4) months. a. The contract between A and B has no binding legal
a. Both statements are true effect.
b. Both statements are false b. A may annul the contract.
c. Statement I is true but statement II is false c. A may ask for its correction
d. Statement I is false but statement II is true d. A may ask for the reformation of the instrument.
32. The following condition are physically impossible, except? 40. Which of the following is correct about relatively simulated
a. To make a dead man live contract?
b. To make a circle that is at the same time a square a. the contract is void
c. To deliver 1 tons of soil from Pluto b. the parties do not intend to be bound at all
d. To kill X c. the parties hide their true agreement
33. Which of the following statement about fraud is not d. the written contract is different from the agreement of
correct? the parties because of mistake
a. The law does not allow waiver of an action for future 41. Pekto, a wealthy businessman, had often paid the debts of
fraud. Ermando his younger brother, in order to maintain the
b. Damages arising from fraud cannot be mitigated or family’s good name. One day, Pekto received a text message
reduced by the courts unlike damages arising from in his cell phone from Carlo a banker, informing him that
negligence especially if there is contributory Ermando had obtained a loan from the bank but had fallen
negligence. behind in his payments. Pekto called him and said “Don’t
c. Waiver of past fraud is valid worry. If he doesn’t pay in three months, I will be the one to
d. Waiver of future fraud is valid pay”. After three months, Carlo sent again a text message to
34. D’s obligation to C is to deliver a Samsung Galaxy S10 worth Pekto to inform him that Ermando had not made any
P65,000 on March 1, 2019. A week before the maturity date, payments and that Carlo was demanding payment from
D was ordered by his superior to go to Davao to confer with Pekto on account of the promise he had made three months
the company’s client. Since D has no time to buy the before.
Samsung Galaxy S10, he offered to give C the amount of a. Carlo may enforce payment against Pekto on account of
P65,000.00 so that C can buy the Galaxy S10. C accepted the his promise since he had been paying off the other
offer. The obligation of D to C in this case is extinguished by: debts of Ermando.
a. Compensation c. Dacion en pago b. Carlo may not demand payment from Pekto because his
b. Payment by cession d. Novation promise is unenforceable.
35. Which of the following statement about cause is not c. Carlo may enforce payment against Pekto as the oral
correct? promise is sufficient agreement between them. The
a. Contract without cause is void requirement of writing is only for convenience.
b. Statement of a false cause in contract shall render them d. Carlo may enforce payment from Pekto because as a
void. wealthy businessman, Pekto should protect his name
c. Although the cause is not stated in the contract, it is and that of his family.
presumed that it exists and is lawful 42. To cancel a contract and restore the parties to their original
d. When the motive of one contracting party is contrary to positions before the contract, the parties should execute a
law, the contract is void. a. Novation c. Rescission
36. Which of the following statements is not correct? b. Release d. Revocation
a. All things which are not outside the commerce of men 43. The following are rescissible contracts, except:
may be the object of a contract. a. Entered into by guardian whenever ward suffers
b. Future things may be the object of a contract damage more than ¼ of value of property.
c. Rights which are intransmissible may be the object of b. Agreed upon in representation of absentees, if absentee
contracts. suffers lesion by more than ¼ of value of property.
d. Future inheritance cannot be the object of contract c. Contracts where fraud is committed on creditor (accion
except in cases expressly authorized by law pauliana.).
37. Which of the following statements is not correct about d. Contracts entered into by minors.
cause? 44. When both the principal obligation and the penal clause can
a. Contracts without cause is void be enforced?
b. Contract with unlawful cause is void a. Alternative penal clause
c. Contract with unlawful motive is void b. Subsidiary penal clause
d. Contract with a false cause is void. c. Cumulative penal clause
38. Which phrase most accurately completes the statement - d. Compensatory penal clause
Any third person who induces another to violate his 45. Which of the following is void if the formality prescribed by
contract: law is not complied with?

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Accountancy Review Center (ARC) of the Philippines Inc. (ATTY. ONG – OCT 2021)

a. Holographic will 53. Bruno bought a residential house and lot from Camella
b. Sale of land worth P1,000,000 Realty for P3,000,000 by giving a down payment of
c. Contract of lease of House and lot for two years P600,000 and promising to pay the balance of P2,400,000
d. Contract of Barter involving immovable property. in 25 years in monthly installment of P8,000. After paying
46. Which of the following is void? 96 installments Bruno defaulted in the payment of the
a. A minor sell his only Alienware Gaming Laptop for subsequent installments. Despite the grace period given, he
P80,000 to X a capacitated person. was not able to make any further payments. Accordingly,
b. A minor sell his only Samsung S7 edge for P25,000 to Camella Realty cancelled the sale. How much cash
his classmate Y surrender value is Bruno entitled to receive?
c. A sell his House and lot to Z orally a. P0 c. P752,400
d. A minor execute a notarial will b. P684,000 d. P889,200
47. The following are the most fundamental characteristics of a 54. Which of the following is a common requisite of right of
void or inexistent contract, except possessory lien and right of stoppage in transitu of the
a. As a general rule, they produce no legal effects unpaid seller?
whatsoever in accordance with the principle "quod a. The buyer failed to pay the price for unreasonable
nullum est nullum producit effectum. period of time
b. They are not susceptible of ratification. b. The object must be in the vendor’s possession
c. Insolvency of the buyer
c. The right to set up the defense inexistent or absolute d. The goods are in transit
nullity cannot be waived or renounce.
55. Statement 1: The thing must be licit and the vendor must
d. The action or defense for the declaration of inexistence have a right to transfer the ownership thereof at the time of
contract prescribe in 10 years. perfection.
48. Statement 1. A void contract produces no effect whatsoever Statement 2: Things having a potential existence cannot be
either against or in favor of anyone; it does not create, the object of the contract of sale.
modify or extinguish the juridicial relation to which refers. a. Both statements are true
Statement 2. The resolution of the validity or voidness of b. Both statements are false
the contract remains a legal or judicial question as it c. Statement I is true but statement II is false
requires the exercise of judicial function. d. Statement I is false but statement II is true
a. Both statements are true 56. Statement 1: If the property is sold for nonpayment of taxes
b. Both statements are false due and not made known to the vendee before the sale, the
c. Statement I is true but statement II is false vendor is liable for eviction
d. Statement I is false but statement II is true Statement 2: Any stipulation exempting the vendor from
49. Action by the vendee against the vendor to nullify the sale the obligation to answer for eviction shall be void, if he
due to some vices or defects which render the object of sale acted in bad faith.
unfit for the use intended or knowledge to which, the a. Both statements are true
vendee would not have bought the thing. b. Both statements are false
a. Accion quanti minoris c. Statement I is true but statement II is false
b. Accion reinvindicatoria d. Statement I is false but statement II is true
c. Accion pauliana 57. Statement 1: The guardian can acquire the property of the
d. Redhibitory action person or persons under his guardianship in a Judicial
50. The following are the characteristics of a contract of sale, auction.
except: Statement 2: The Executors and administrators can acquire
a. Principal, which means that a contract of sale can exist the property of the estate under administration in a public
by itself auction.
b. Real, which requires the delivery of the object of the a. Both statements are true
contract of sale for its perfection. b. Both statements are false
c. Onerous, where rights are acquired in exchange of a c. Statement I is true but statement II is false
valuable consideration. d. Statement I is false but statement II is true
d. Bilateral, which means that both parties are bound 58. Statement 1: The parties may stipulate that ownership in
reciprocally to each other. the thing shall not pass to the purchaser until he has fully
51. S and B agreed on the sale of a house and lot for P5,000,000 paid the price.
where the former can buy it back but did not specifically fix Statement 2: The ownership of the thing sold shall be
or designate the period of repurchase. In this case the transferred to the vendee upon actual delivery only.
period of repurchase is: a. Both statements are true
a. 2 years c. 8 years b. Both statements are false
b. 4 years d. 10 years c. Statement I is true but statement II is false
52. In the following cases, the pacto de retro sale entered into d. Statement I is false but statement II is true
by the parties will be regarded as an equitable mortgage. 59. Statement 1: Sale is a consensual contract; therefore,
Choose the exception. delivery or payment is not essential for perfection.
a. When the price of the sale is inadequate but not Statement 2: Emptio rei speratae is the sale of thing which
unusually so. is come into existence, the quality and quantity of which
b. When the vendor remains in possession of the thing are unknown.
sold. a. Both statements are true
c. When the purchaser retains part of the purchase price. b. Both statements are false
d. When the vendee binds himself to pay the taxes on the c. 1st statement is true and 2nd statement is false
thing sold. d. 1st statement is false and 2nd statement is true

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60. The purpose of this action is to ask for a proportionate precluded from setting up the forgery or want of
reduction of the price - authority.
a. Quanti minoris d. Indorser who sign on a separate piece of paper known
b. Redhibitory action as allonge is not liable on the instrument because his
c. Replevin signature does not appear on the instrument itself.
d. Accion vindicatoria 69. Which of the following items would rendered the
61. In case of a pledge of animals, their offspring shall pertain instrument non-negotiable?
to the? a. With interest
a. The Debtor c. Pledgor b. With stated installment
b. The creditor d. The pledgee c. With order or promise to do any act in addition to
62. Which of the following is not correct in pledge? payment of money.
a. It is an accessory contract d. With cost of collection if the instrument is not paid at
b. Electricity may be the object of pledge because this is maturity.
controlled by science. 70. The instrument read as follows:
c. The pledger may dispose the object of pledge. Pay to the order of X P100,000.
d. As a rule, the pledgee can deposit the thing pledged (Sgd Y)
with a third person. Which of the following is not a valid negotiation of the
63. Which of the following cannot be the object of contact of instrument?
sale? a. Pay to “A” for P50,000 and pay to “B” for P50,000 (Sgd
a. Future property c. Lawful services X)
b. Transmissible right d. Present property b. Pay to A and/or B (Sgd X)
64. Statement 1: In contract to sell, ownership passes to the c. Pay to A and B (Sgd X)
buyer upon actual or constructive delivery. d. Pay to A (Sgd X)
Statement 2: A contract to sell, even if accepted by the 71. The following are the modes of extinguishment of a contract
buyer is not an absolute sale. of sales?
a. Both statements are true a. Legal redemption
b. Both statements are false b. Conventional redemption
c. 1st statement is true and 2nd statement is false c. Cancellation of sale
d. 1st statement is false and 2nd statement is true d. Death of the vendor
65. The following are characteristic of chattel mortgage, 72. Which of the following contain unconditional order to pay?
except? a. Bill of exchange c. Due Bill
a. Indivisible c. Nominate b. Promissory note d. Certificate of deposit
b. Accessory d. Real contract 73. A check must be presented for payment
66. Statement I - The reason for the prohibition of pactum a. Within reasonable time after the first delivery of the
commissorium is that the amount of loan obtained from the check complete in its form
creditor is usually much less than the actual value of the b. Within reasonable time after last negotiation
thing pledge or mortgaged. If allowed, the creditors are c. Within reasonable time after the date of the instrument
effortlessly enriched at the expense of the debtor. d. At anytime
Statement II - A pledge or mortgage is indivisible even 74. Which of the following statement is not correct?
though the debt may be divided among the successors in a. When the instrument is intentionally cancelled by the
interest of the debtor or of the creditor. holder the instrument is discharged.
a. First statement is true; second statement is false. b. When the instrument is shown to be cancelled the
b. First statement is false; second statement is true. burden of proof is on the part of the party who alleged
c. Both statements are true. that the cancellation was made unintentionally.
d. Both statements are false. c. Cancellation of the instrument whether intentional or
67. The instrument read as follows: unintentional will discharge the instruments.
I promise to pay to the order of X and Y P100,000. d. Cancellation made unintentionally is inoperative.
Sgd (M) and (N) 75. Which of the following defenses is not available to the
To: D drawer?
Which of the following statement is correct? a. The payee is fictitious
a. The instrument is non-negotiable b. The payes is a minor
b. The liability of M and N is mancomunada c. The payee is insane
c. In case X and Y negotiate the promissory note, anyone d. The payee signature is forged
of them may indorse the instrument. 76. D drawn a bill of exchange in favor of X or order for P10,000.
d. The promissory note is payable on demand. The bill was address to D. The bill was negotiated by X to Y.
68. Which of the following statement is correct about the Which of the following statement is not correct?
liability of a person not appearing in the instrument? a. The liability of D is primary
a. The principal is not liable for the signature of his duly b. Y the holder may treat the instrument as a promissory
authorized agent because his signature does not appear note.
in the instrument. c. Presentment for payment is necessary to charge the
b. The drawee to whom a bill is delivered for acceptance Drawer.
destroys the same is not liable on the instrument d. Notice of dishonor is not necessary to charge the
because the bill is deemed dishonored by non- Drawer.
acceptance. 77. H is an indorsee of a promissory note that simply state:
c. The forger is liable even his signature does not appear “PAY TO JUAN TAN OR ORDER 400 PESOS”. The note has no
in the instrument because the forger is already date, no place of payment and no consideration mentioned.
It was signed by MK and written under his letterhead

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Accountancy Review Center (ARC) of the Philippines Inc. (ATTY. ONG – OCT 2021)

specifying the address, which happens to be his residence. c. Both statements are true.
TH accepted the promissory note as payment for services d. Both statements are false.
rendered to SH, who in turn received the note from Juan 85. Statement1: The pledgee cannot deposit the thing pledged
Tan as payment for prepaid cellphone card worth 450 with a third person even there is a stipulation authorizing
pesos. The payee acknowledged having received the note him to do so.
on August 1, 2021. Which of the following statement is Statement 2: The pledgee is responsible for the acts of his
correct? agents or employees with respect to the thing pledged.
a. The instrument is negotiable. a. First statement is true; second statement is false.
b. The instrument non-negotiable because there is no b. First statement is false; second statement is true.
drawer and drawee. c. Both statements are true.
c. The instrument is not negotiable because there is no d. Both statements are false.
date, no place of payment. 86. There is no right of legal redemption in this case?
d. The instrument non-negotiable, because there is no a. Where a co-owner of an undivided immovable sells his
consideration mentioned in the instrument. interest to a third person.
78. M issued to P, accommodated party, a negotiable b. Where the adjoining owner of rural property one
promissory note for P10,000. P endorses it to A, A to B, B to hectare or less sells his property to a third person who
C. Which of the following is incorrect? owns other rural land or lands.
a. P may directly pay C c. Where the adjoining owner of urban land which is so
b. M can refuse to pay C small and so situated that it cannot be used for a
c. M can collect from P, if M will pay C practical purpose sells the same to a third person.
d. Between M and P, M is secondarily liable while P is d. Where the co-owner of an undivided immovable
principally liable. property donates his undivided interest to a third
79. Statement 1: An indorsement “Pay to A for my use” is an person.
example of qualified indorsement. 87. Contracts are presumed equitable mortgage under the
Statement 2: An indorsement “Pay to A” is an example of following:
restrictive indorsement. I – The purchaser retains for himself a part of the purchase
a. First statement is true; second statement is false. price.
b. First statement is false; second statement is true. II – When the vendee binds himself to pay the taxes on the
c. Both statements are true. thing sold
d. Both statements are false. III – The price of the sale with right to repurchase is fairly
80. M issued a promissory note in favor of P (minor) or order valued
for P10,000. P indorse and deliver the instrument to A. Then a. I only c. I and III
A indorse and deliver the instrument to B, the present b. I and II d. I, II and III
holder. Which of the following statements is correct? 88. D mortgaged his house and lot to C as security for the loan
a. When B demand payment from M, M can set up the amounting to P1M. Which of the following statements is
defense of minority of P. correct?
b. P being a minor cannot transfer title to A. a. C may automatically be the owner of the mortgaged
c. P is not liable to B being a minor. house and lot upon non-payment of the loan, if that is
d. A is not liable to B because his prior party is a minor. stipulated in their written contract
81. "Pay to C for collection only, Sgd. B" is an example of a b. If there is stipulation prohibiting D to sell his house
restrictive type of endorsement which is classified as: and lot while the loan remains unpaid, D cannot sell the
a. Prohibitive type c. Trust type mortgaged property before the maturity date of the
b. Agency type d. Answer not given loan.
82. In a cashier’s check, the liability of the drawer is primary c. If the mortgaged property is foreclosed but the
because proceeds of the sale is less than the amount of the loan,
a. The drawer and the drawee are the same person C has no more right to demand payment of the balance
b. The drawee is fictitious person from D
c. The drawee has no capacity to contract d. If the written contract of mortgage is not registered at
d. The drawer and the payee are the same person. the Office of the Registry of Deeds, the real mortgage is
83. Which of the following is not a correct statement in a still valid between D and C
contract of antichresis? 89. D borrowed P30,000.00 from C. To secure the debt, D
a. Antichresis is a formal contract pledged his ring, wristwatch, and necklace. Before the debt
b. Unless there is a stipulation, the creditor is obliged to could be paid, C died leaving X, Y and Z as heirs. By
pay the taxes and charges upon the estate. agreement among the heirs who inherited the credit, the
c. The creditor is bound to bear the expenses necessary ring would secure the share of X of the credit, the
for its preservation and repair. wristwatch the share of Y, a necklace the share of Z. Later,
d. The creditor acquires the ownership of the real estate D pays X P10,000.00.
for non-payment of the debt within the period agreed a. D can demand the extinguishment of the pledge of the
upon. ring.
84. Statement1: It is also of the essence of these contracts that b. X may release the pledge of the ring.
when the principal obligation becomes due, the things in c. The pledge of the ring will remain until the shares of Y
which the pledge or mortgage consists may be alienated for and Z are paid by D.
the payment to the creditor. d. D can demand the extinguishment of the pledge of the
Statement 2: The indivisibility of a pledge or mortgage is ring, wristwatch and necklace because there has been
affected by the fact that the debtors are not solidarily liable partial payment.
a. First statement is true; second statement is false. 90. Statement 1: The debtor shall take care of the thing pledged
b. First statement is false; second statement is true. with the diligence of a good father of a family; he has a right

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Accountancy Review Center (ARC) of the Philippines Inc. (ATTY. ONG – OCT 2021)

to the reimbursement of the expenses made for its Statement 2: BP 22 is unconstitutional because it
preservation, and is liable for its loss or deterioration. transgressed the constitutional inhibition against
Statement 2: The creditor cannot use the thing pledged, imprisonment for debt.
without the authority of the owner, and if he should do so, a. First statement is true; second statement is false.
or should misuse the thing in any other way, the owner b. First statement is false; second statement is true.
may ask that it be judicially or extrajudicially deposited. c. Both statements are true.
a. Both are true d. Both statements are false.
b. Both are false 97. Statement 1: Where the check is drawn by a corporation,
c. No. 1 is true; No. 2 is false company or entity, the person or persons who actually
d. No. 1 is false; No. 2 is true signed the check in behalf of such drawer shall be liable for
91. Statement 1: The debtor cannot ask for the return of the BP 22.
thing pledged against the will of the creditor, unless and Statement 2: It shall be the duty of the drawee of any check,
until he has paid the debt and its interest, with expenses in when refusing to pay the same to the holder thereof upon
a proper case. presentment, to cause to be written, printed, or stamped in
Statement 2: If through the negligence or willful act of the plain language thereon, or attached thereto, the reason for
pledgee, the thing pledged is in danger of being lost or drawee's dishonor or refusal to pay the same:
impaired, the pledgor may require that it be deposited a. First statement is true; second statement is false.
with a third person b. First statement is false; second statement is true.
a. Both are true c. Both statements are true.
b. Both are false d. Both statements are false.
c. No. 1 is true; No. 2 is false 98. The following are element of BP 22, except
d. No. 1 is false; No. 2 is true a. The act of making, drawing, and issuance of any check
92. Statement 1: A statement in writing by the pledgee that he to apply on account or for value;
renounces or abandons the pledge is not sufficient to b. Knowledge of the maker, drawer, or issuer that at the
extinguish the pledge. time of issue he does not have sufficient funds in or
Statement 2: If, without the fault of the pledgee, there is credit with the drawee bank for the payment of the
danger of destruction, impairment, or diminution in value check in full payment upon its presentment;
of the thing pledged, he may cause the same to be sold at a c. Subsequent dishonor of the check by the drawee bank
public sale. for insufficiency of funds or credit or dishonor of the
a. Both are true check for the same reason had not the drawer, without
b. Both are false any valid cause, ordered the bank to stop payment.
c. No. 1 is true; No. 2 is false d. Deceit or damage to the payee thereof.
d. No. 1 is false; No. 2 is true 99. Under BP 22, if the amount of check involved is P110,000,
93. BP 22 punishes the act as offense against the maximum fine that may be imposed is?
a. Public order c. Person a. P110,000 c. P220,000
b. Property d. Liberty b. P200,000 d. P250,000
94. Statement 1: Under BP 22, in order to create the prima 100. The maximum imprisonment for every bounced check
facie presumption that the issuer knew of the insufficiency under BP 22 is
of funds, it must be shown that he or she received a notice a. 6 months
of dishonor and, within five banking days thereafter, failed b. 1 year
to satisfy the amount of the check or make arrangement for c. 2 years
its payment. d. 4 years
Statement 2: To hold a person liable under B.P. Blg. 22, it is
not enough to establish that a check issued was
subsequently dishonored. It must be shown further that
the person who issued the check knew ‘at the time of issue
that he does not have sufficient funds in or credit with the
drawee bank for the payment of such check in full upon its
presentment.
a. First statement is true; second statement is false.
b. First statement is false; second statement is true.
c. Both statements are true.
d. Both statements are false.
95. Which of the following statement is correct under bouncing
check law (BP 22)?
a. It is an offense against property
b. The non-payment of debt is what the law punishes
c. The act of making and issuing a worthless check is a
mala in se.
d. It covers all kinds of checks, whether present dated or
postdated, or whether issued in payment of pre-
existing obligations or given in mutual or simultaneous
exchange for something of value.
96. Statement1: The enactment of BP 22 is a declaration by the
legislature that, as a matter of public policy, the making and
issuance of a worthless check is deemed public nuisance to
be abated by the imposition of penal sanctions.

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