BUSINESS LAW

MULTIPLE CHOICE.
1. A without authority from B sold the latter's car in the name of the latter.The
contract is therefore:
a. Rescissible
b. Voidable
c. Unenforceable
d. Void

2. D,fearing that his creditor C,would go after his only parcel of land to satisfy his
claim for payment of D's debt,sold his said land to X who did not know of D's
intention. Decide:
a. C can ask for annulment of the sale as this is voidable contract.
b. C may ask for damages against X since he was damaged by the sale.
c. C can file an action for rescission of the sale.
d. C cannot ask for the rescission of the sale.

3. Statements:
Mutual error as to the legal affect of an agreement when the purpose of the
parties is frustrated may result in the reformation of the instrument.
Mutual mistake of the parties and the instrument does not express the true
agreement will make the contract voidable.
a. Both statements are false
b. Both are true
c. First is true; second is false
d. First is false; second is true

4. Statements:
In case of doubt, a contract purporting to be sale shall be construed as mortgage.
In annulment of contracts,there shall always be mutual restitution of both parties
thereof.
a. First statement is false;second is true
b. Both are false
c. Both are true
d. First statement is true; second is false

5. Statements:
Just like voidable and unenforceable contracts,rescissible contracts mayalso be
ratified.
In case of fraud or mistake,the action for annulment must be made within four
years from the commission of the vice of consent.
a. Both statements are true
b. Both are false
c. First is true: second is false
d. First is false;secondis true
6. A and B agreed on February 3,2015 that B will construct the house of A in
January 2016.The contract was orally entered into. B received a down payment
from A with the balance payable after completion of the house. The contract is:
a. Voidable because it not in public instrument.
b. Enforceable even if not in writing, having been ratified.
c. Unenforceable because it is not in writing and yet performance there is
after one year from perfection.
d. Void because it is not in writing as required by law

7. A gave B One Million Pesos for the latter ta kill C. Before B could accomplish his
criminal intent to kill C, A changed his mind and demanded the return of the
money from B. Decide:
a. A cannot recover the payment he made to B because it was a void
contract which does not allow recovery by the guilty party.
b. A cannot recover the money because the contract is unenforceable.
c. A can recover the money although the contract is void since the
crime was not committed.
d. No recovery and both A and B will prosecuted for their crime.

8. A appointed B to sell his land:

If the authority of B is oral and the sale is in public instrument, the sale is void.
If the authority of B is in writing and the sale is oral,the contract is unenforceable.
a. The first statement is false; the second is true
b. The first is true; second is false
c. Both are true
d. Both are false

9. D borrowed a sum of money from C with G as guarantor. The loan is in writing

but the guaranty is oral. D failed to pay C, who now is demanding payment from
G.Can G be compelled to pay?
a. Yes, because he is the guarantor obliged to pay in case the debtor
defaults:
b. No, because the guaranty is void having been orally made.
c. No, because the guaranty is unenforceable, against G, it being oral.
d. Yes, because the guaranty is enforceable, writing not needed.

10. In three of the following the contract is cleansed of its defect by ratification.
Which is not so ratified?
a. Contract where the creditor was damaged by the act of the debtor
intended to defraud him.
b. Contract entered into by a person incapable of giving consent.
c. Sale of chattels orally entered into for a price not less than five hundred
pesos.
d. Lease of real property for more than one year orally entered into.
11. Because A wants to sell his land to B but the latter does not want to buy the
same, A forced B to buy his land. The contract:
a. Not binding upon B since his consent was, vitiated.
b. It is unenforceable as against B but not against A.
c. May be ratified expressly or tacitly by A.
d. It is valid, binding and enforceable.

12. A threatened B with an administrative charge for immorality if the latter does not
marry her because she is already pregnant with their child. Fearing that she may
do so, B married her.The contract of marriage is therefore voidable because of
threat. A simple mistake of account may give rise to the annulment of the
contract because of mistake.
a. First statement is false; second is true
b. Both are false
c. Both are true
d. First is true; second is false

13. D obtained from C a loan amounting to P50,000.00, the same being secured by a
mortgage on D's lot. Thereafter,C assigned his credit right to T with notice to D.
Based on the foregoing facts,which of the following statements is incorrect?
a. T cannot collect from D if D does not give his consent to
theassignment.
b. T can collect from D. D's consent to the assignment is not required.
c. T can collect from D and D cannot pay, T can foreclose the mortgage on
the lot.
d. The notice to D of the assignment is sufficient. D must make his payment
to T and no longer to c.

14. A and B entered into a contract of mortgage. However, as written, the document
states it is a contract of sale with right of repurchase, the error due to the fault of
the clerk/typist. Hence:
a. The contract of sale must be annulled since it is voidable.
b. The instrument has to be enforced as is for it is the proof of theagreement
between the parties.
c. Because of the negligence of the parties in signing without first reading the
instrument,they are bound by the contents of the same.
d. The instrument may be reformed because it does not express the
true agreement of the parties.

15. A kind of mortgage which, although lacking some formality, form of words, or
requisites prescribed by law, show the intention of the parties to charge real
property as security for debt and contains nothing impossible or contrary to law is
known as:
a. Legal mortgage.
b. Equitable mortgage
c. Conventional mortgage
 d. Voluntary mortgage

16. A and B agreed on a contract of pledge. However, they entered into a contract of
mortgage in the honest belief that the mortgage and pledge are the same. The
instrument may be reformed:
a. No, the document cannot be reformed since the contract is void.
b. No, it cannot be changed. They are bound by the document which speaks
for itself.
c. Yes, it can be reformed because it does not express the true agreement of
the parties.
d. No, it cannot be reformed because there was no meeting of minds
between the parties and the remedy is annulment of contract.

17. A sold to B a fake Rolex watch on January 3, 2016. On January 13, 2016, B
discovered that the watch he bought from A was an imitation. The law provides
that he can annul the sale as a voidable contract within four years.Prescription
starts from:
a. January 3, 2016 when the sale was perfected
b. The time of delivery of the watch to B.
c. The time they first talked about the sale of the watch.
d. January 13, 2016 when the fraud was discovered by B.

18. This is a kind of symbolic delivery where the vendor remains in possession of the
property sold,such as by virtue of a lease agreement with the vendee.
a. Traditio longa manu
b. Traditio brevi manu
c. Traditio constitutum possessorium
d. Delivery to common carrier

19. S promised to sell his car to B for P200,000.00 giving B 30 days to decide.B
accepted the promise of S and informed S that he (B) would make known his
decision before the lapse of 30 days.He also gave S P2,000.00 as consideration
so that S would hold on to his promise. The contract entered into between S and
B and the consideration given by B to S are known as:
a. Option contract and option money, respectively.
b. Contract of sale and earnest money, respectively.
c. Contract of sale and down payment, respectively.
d. Contract of sale and reservation money, respectively.

20. Refer to No. 19.

a. S may withdraw his offer to sell before the lapse of 30 days by informingB.
b. S may not withdraw his offer before the lapse of 30 days.
c. S may withdraw the offer by returning the amount of P 2,000.00 that was
paid to him by B.
 d. S may withdraw his offer even before the lapse of 30 days if a favorable
price, i.e., more than P 200,000.00, is offered to him by another
prospective buyer.

21. A contract of sale is not a:

a. Principal contract
b. Nominate contract
c. Consensual contract
d. Real contract

22. Upon the proposal of a third person, a new debtor substituted the original debtor
without the latter's consent. The creditor accepted the substitution. Later,
however, the new debtor became insolvent and defaulted in his obligation. What
is the effect of the new debtor's default upon the original debtor?
a. The original debtor is freed of liability since novation took place and
this relieved him of his obligation.
b. The original debtor shall pay or perform the obligation with recourse to the
new debtor.
c. The original debtor remains liable since he gave no consent to the
substitution.
d. The original debtor shall pay or perform 508 of the obligation to avoid
unjust enrichment on his part.

23. If a movable property is sold separately to two or more different

vendees,ownership shall belong to the person:
a. Who in good faith first paid the purchase price in full.
b. Who in good faith first recorded the sale in the Registry of Property.
c. Who in good faith presents the oldest title.
d. Who in good faith first took possession of the property.

24. The following may not be valid objects of a contract of sale except:
a. Objects outside the commerce of men
b. Illicit things
c. Future goods
d. Impossible service

25. A contact of sale is perfected:

a. Upon compliance with the requirements of the law as to form.
 b. Upon delivery of the object of the contract.
c. Upon the meeting of the minds on the thing which is the object of
thecontract and upon the price.
d. Upon demand.
26. When the goods are delivered to the buyer, the ownership thereof passes to the
buyer in;
a. Sale on approval
b. Sale or return
c. Sale on trial
d. Contract to sell
27. A bought B's property through C, an agent empowered with a special power of
attorney (SPA) to sell the same. When A was ready to pay as scheduled, B
called, directing A to pay directly to him. On learning this, C, B's agent, told A to
pay through him as his SPA provided and to protect his commission. Faced with
two claimants, A consigned the payment in court. B protested,contending that the
consignation is ineffective since no tender of payment was made to him. Is he
correct?
a. No, since consignation without tender of payment is allowed in the
face of the conflicting claims on the debtor.
b. Yes, as owner of the property sold, B can demand payment directly to
himself.
c. Yes, since A made no announcement of the tender.
d. Yes, a tender of payment is required tor a valid consignation.

28. A natural obligation under the New Civil Code of the Philippines is one which:
a. The obligor has a moral obligation to do, otherwise entitling the obligee to
damages.
b. Refers to an obligation in writing to do or not to do.
c. The obligee may enforce through the court if violated by then obligor
d. Cannot be judicially enforced but authorizes the obligee to obligor.
retain the obligor's payment or performance.

29. A borrowed P1 million from a bank, secured by a mortgage on his land. Without
his consent, his friend B paid the whole loan. Since A benefited from the
payment, can B compel the bank to subrogate him in its right as mortgagee of A's
land?
a. No, but the bank can foreclose and pay B back.
b. No, since B paid for A's loan without his approval.
c. Yes, since a change of creditor took place by novation with the bank's
consent.
 d. Yes, since it is but right that B be able to get back his money and, if not, to
foreclose the mortgage in the manner of the bank?

30. X, the owner, constituted a 10-year usufruct on his land as well as on the building
standing on it in Y's favor. After flood totally destroyed the building 5 years later,
X told Y that an act of God terminated the usufruct and that he should vacate the
land. Is X, the owner of the land, correct?
a. No, since the building was destroyed through no fault of Y.
b. No, since Y still has the right to use the landandmaterials left on it.
c. Yes, since Y cannot use the land without the building.
d. Yes, since the destruction of the building without the X's fault terminated
the usufruct.

31. R borrowed P1 million from E and F who acted as solidary creditors.When the
loan matured, E wrote a letter to R, demanding payment of the loan directly to
him.Before R could comply, F went to see him personally to collect and he paid
him. Did R make a valid payment?
a. No, since R should have split the payment between Rodrigo
andFernando.
b. No, since E, the other solidary creditor already made a priordemand
for payment from R.
c. Yes, since the payment covers the whole obligation.
d. Yes, since F was a solidary creditor, payment to him extinguished the
obligation.

32. It is a, conduct that may consist of giving, doing, or not doing something.
a. obligation
b. Juridical necessity
c. Prestation
d. Contract

33. The following are the elements of quasi-delict,except:

a. Act or omission
b. Fault/negligence
c. Damage/injury
d. Pre-existing contract

34. This term refers to a delay on the part of both the debtor and creditor in
reciprocal obligations.
 a. Mora accipiendi
b. Mora solvendi
c. Compensation morae
d. Solution indibiti

35. The following are the elements of an obligation,except:

a. Juridical/Legal Tie
b. Active subject
c. Passive subject
d. Consideration

36. A debtor is liable for damages if he is guilty of any of the following,except:

a. default (mora)
b. mistake
c. negligence(aulpa)
d. breach through contravention of the tenor thereof

37. A owed B P1 million due on October 1, 2015 but failed to pay her on due date. B
sent a demand letter to A giving her 5 days from receipt within which to pay. Two
days after receipt of the letter, A personally offered to pay B in manager's check
but the latter refused to accept the same. The 5 days lapsed.May A's obligation
be considered extinguished?
a. Yes, since B's refusal of the manager's check, which is, presumed funded,
mounts to a satisfaction of the obligation.
b. No, since tender of payment even in cash, if refused, will not
discharge the obligation without proper consignation in court,
c. Yes, since A tendered payment of the full amount due.
d. No, since a manager's check is not considered legal tender in the
Philippines.

38. It is a juridical relation arising from lawful, voluntary and unilateral acts based on
the principle that no one should unjustly enrich himself at the expense of another.
a. Quasi-contract
b. Quasi-delict
c. Contract
d. Delict
39. B, F, and T bound themselves solidarily to pay A the amount of P5,000.00.
Suppose B paid the obligation, what is his right as against his co-debtors?
a. B can ask for reimbursement from F and T.
b. B can sue F and T for damages.
c. B can sue for rescission.
d. B can claim a refund from A.

40. 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 a normal manner; impossibility must be absolute not
partial,otherwise not force majeure.
d. Debtor contributed to the aggravation of the injury to thecreditor.

41. B, F and T bound themselves solidarily to pay A the sum of P10,000.00. When
the obligation became due and demandable, A sued B for the payment of the
P10,000.00. B moved to dismiss on the ground that there was failure to include F
and T who are also debtors. Will the motion to dismiss prosper?
a. Yes, because F and T should have been impleaded as theirobligation is
solidary.
b. No, because the creditor may proceed against any one of the
solidary debtors or some or all of them simultaneously.
c. No, because a motion to dismiss is a prohibited pleading.
d. Yes, because F and T should also pay their share of obligation.

42. It is an intentional evasion of the faithful performance of the obligation.

a. Negligence
b. Fraud
c. Delay
d. Mistake

43. The following are the requisites of mora solvendi, except:

a. Obligation pertains to,the debtor and is determinate, due, demandable,and
liquidated.
b. Obligation was performed on its maturity date.
c. There is judicial or extrajudicial demand by the creditor.
d. Failure of the debtor to comply with such demand.
44. X borrowed money from a bank, secured by a mortgage on the land of Y, his
close friend. When the loan matured, Y offered to pay the bank but it refused
since Y was not the borrower. Is the bank's action correct?
a. Yes, since X, the true borrower, did not give his consent to Y's offer to
pay.
b. No, since anybody can discharge X's obligation to his benefit.
c. No, since Y, the owner of the collateral, has an interest in the
payment of the obligation.
d. Yes, since it was X who has an obligation to the bank.

45. A debtor may still be held liable for loss or damages even if it was caused by
fortuitous event in any of the following instances,except:
a. The debtor is guilty of dolo, malice or bad faith, has promised the same
thing to two or more persons who do not have the same interest.
b. The debtor contributed to the loss.
c. The thing to be delivered is generic.
d. The debtor is guilty of fraud, negligence or delay or if he contravened the
tenor of the obligation.

46. An obligation which is based on equity and natural law is known as:
a. pure
b. quasi-contract
c. civil
d. natural

47. The following are the requisites of legal compensation, except:

a. That each of the obligors is bound principally and that he be the same
time a principal creditor of the other.
b. That both debts consist in a sum of money, or if the things dueare
consumable,they be the same kind, and also of the same quality if the
latter has been stated.
c. That the two (2) debts are not yet due.
d. That they be liquidated and demandable.

48. D bought a car from J and delivered a check in payment of the same, Has D paid
the obligation?
a. No, not yet, The delivery of promissory notes payable to order, or
bills of exchange or other mercantile documents shall produce the
 effect of payment only when they have been cashed, or when
through the fault of the creditor they have been impaired.
b. Yes, because a check is a valid legal tender of payment.
c. It depends. If the check is a manager's check or cashier's check it will
produce the effect of payment.If it's an ordinary check, no payment.
d. Yes, because a check is as good as cash.

49. B, E and T are solidary debtors of A. Twelve (12)years afterthe obligation

became due and demandable, B paid A and later asked for reimbursement of E's
and T's shares. Is B correct?
a. No, because the obligation has already prescribed.
b. Yes, because the obligation is solidary.
c. No, because in solidary obligation any one of the solidary debtors can pay
the entire debt.
d. Yes, because F and T will be unduly enriched at the expense of B.

50. B, F and T are solidary debtors under a loan obligation of P300, 000.00 which
has fallen due. The creditor has, however, condoned F's entire share in the debt.
Since T has become insolvent, the creditor makes a demand on B to pay the
debt. How much, if any,may B be compelled to pay?
a. P200,000.00
b. P300,000.00
c. P100,000.00
d. P150,000.00