Since 1977
BUSINESS LAW
Quiz 2
1. Statement 1: The usual exaggerations in trade constitute
fraud since the tendency is to deceive a contracting party.
Statement 2: An advertisement of things for sale is merely
an invitation for the public to make an offer.
a. Both statements are true
b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.
2. Y, a fourteen-year old high school student sold his gold
necklace to his teacher for P10,000.00 and he spent
P7,400.00 for buying a new jacket, denim pants and long-
sleeved polo shirt. He also spent P800.00 for food and
school materials and he deposited P1,000.00 in his bank
account. He lost the remaining amount of P800.00 in
gambling. The father of Y filed an action for the
annulment of the contract of sale, which was granted by
the court and Y’s gold necklace was returned to him.
How much should Y and his father return to the
instructor?
a. P10,000.00 c. P8,400.00
b. P9,200.00 d. P7,400.00
3. A mortgaged his car to B to secure his loan amounting to
P150,000.00. Due to the negligence of the typist, the
document signed by A and B shows that the car of A was
sold to B for P140,000.00. Which of the following
statements is correct?
a. The contract of sale between A and B is voidable
because there is a mistake
b. The contract of sale between A and B is relatively
simulated
c. The contract of sale between A and B may be
reformed
d. The contract of sale between A and B rescissible
because of the damage suffered by A
4. Amazed by the skill of X who can paint portraits using
brushes inserted in his right armpit, Y entered unto a
contract with the former to have his own portrait done
and P50,000 as full payment therefore. After he has
started the portrait but before its completion, X was
sideswipe speeding car while he was drunk and walking
beside the way causing the doctors to have his right arm
amputated this case what is the remedy of Y?
a. Nothing, as the service became impossible by reason
of an act independent of the will of the debtor.
b. Equivalent performance in terms of damages
c. Specific performance by compelling X to go on
painting Y's portrait.
d. Substitute performance by allowing a third person to
do his portrait with expenses therefore charged to X.
5. A bought a parcel of land from B on installment. When
the first installment fell due, A did not pay. His defense
was that he did not have available money, and he
therefore pleaded impossibility of performance.
a. A obligation is extinguished because A has no
available money.
b. A obligation is extinguished because of impossibility
of performance.
c. A is liable. A mere pecuniary inability to fulfill an
engagement does not discharge the obligation of the
contract.
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ATTY.ONG/LOPEZ
MAY 2019
d. A is liable because the obligation is to pay specific
money.
6. Statement 1: Where a written contract does not embody
the intention of the parties by reason of mistake, fraud or
accident but where there is a meeting of the minds, the
remedy is reformation of said instrument.
Statement 2: Payment by check immediately extinguishes
the obligation.
a. Both statements are true
b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.
7. Statement 1: Whenever the obligation consists in payment
of money, the damages shall be in the form of interest
agreed upon or if there is none, then in the legal rate of
interest now fixed at 12% per annum under certain
conditions.
Statement 2: In alternative obligations, the right of choice
generally belongs to the creditor.
a. Both statements are true
b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.
8. Statement 1: Whenever there are present two or more
debtors or two or more creditors in the same obligation
the presumption is that it is joint.
Statement 2: The loss or destruction of the substitute
through the fault of the debtor in a facultative obligation
renders him liable to the creditor for damages.
a. Both statements are true
b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.
9. Statement 1: Penal clauses, being the product of
agreement between the parties, may not be reduced or
mitigated by the courts under all circumstances.
Statement 2: Option money is considered as part of the
purchase price.
a. Both statements are true
b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.
10. 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
the creditor
11. The following are all factors vitiating consent, except
a. Mistake c. Intimidation
b. Negligence d. Fraud
12. Which of these obligations is real in character?
a. To paint a house c. To write a book
b. To repair a car d. None of the above
13. Statement 1: D owes C P20,000.00 to secure the payment
of which D pledged a diamond ring. Subsequently, this
EXCEL PROFESSIONAL SERVICES, INC.
ring was voluntarily returned to D by C. The obligation of
D to pay C P20,000. is impliedly condoned and therefore
extinguished.
Statement 2: A voidable contract is less defective than an
unenforceable one.
a. Both statements are true
b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.
14. Statement 1: Should there be two or more officious
managers in the negotiorum gestio, the liability is joint
and several.
Statement 2: An indivisible obligation is automatically
solidary in character.
a. Both statements are true
b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.
15. Statement 1: The ability of two or more payees in the
solution indebiti is only joint.
Statement 2: As a general rule, the law allows interest on
interest.
a. Both statements are true
b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.
16. Statement 1: Insolvency is more advantageous to the
debtor than payment by cession.
Statement 2: Tender of payment alone in certain cases
may extinguish an obligation.
a. Both statements are true
b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.
17. S orally sold to B his house and lot for P5,000,000 where
B initially paid P50,000. After paying the balance B now
seeks to register the lot in his name, but the Register of
Deeds refuses to do so. In this case:
a. The transaction involving the oral sale of a house and
lot is null and void.
b. The contract between S and B is unenforceable under
the Statute of Fraud.
c. The oral sale of the house and lot although
unenforceable under the Statute of Fraud has been
ratified by the receipt of the consideration and,
therefore, B can compel S to execute the deed of sale
in a public document.
d. If S does not want to execute the public document, he
can rescind or cancel his agreement with B.
18. Which of the following is not included in the civil
liabilities arising from crime or delict?
a. Reparation
b. Restitution
c. Imprisonment
d. Indemnification of damages
19. Which of the following stipulation is void?
Stipulation I. Any stipulation exempting the vendor from
the obligation to answer for eviction even if he acted in
bad faith.
Stipulation II. Stipulation exempting the agent from the
obligation to render an account.
Stipulation III. A stipulation which excludes capitalist
partners from any share in the profits.
a. I and II c. I and III
b. II and III d. All of them
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20. The following are rescissible contracts, except:
a. Entered into by guardian whenever ward suffers
damage more than ¼ of value of property.
b. Agreed upon in representation of absentees, if
absentee suffers lesion by more than ¼ of value of
property.
c. Contracts where fraud is committed on creditor
(accion pauliana.).
d. Contracts entered into by minors.
21. The following are the remedies of the creditor to pursue
his claims against the debtor, except to:
a. pursue the property owned and in possession of the
debtor.
b. compel the debtor to perform the service in
obligations to do.
c. exercise all the rights and bring all the actions of the
debtor (accion subrogatoria).
d. impugn the acts which the debtor may have done to
defraud his creditors (accion pauliana).
22. Crisostomo donated a parcel of land to Anthony worth
P500,000 in a public instrument on January 21, 2014.
Anthony accepted the same on the same day in a separate
private instrument. When Anthony now seeks to
registered the land in the Registry of Property, the latter
refused the registration because the acceptance of the
donated property was not in a public instrument. In this
case:
a. Anthony can compel the Registry of Property to
register the land under his name because the donation
is valid.
b. Anthony cannot compel the Registry of Property to
register the land under his name because the donation
is void.
c. The donation is valid but the registration may be
refused on the ground that the acceptance was not in a
public instrument.
d. The Registry of property committed a grave abuse of
discretion in refusing the registration of the donated
property in question.
23. S sold his Toyota car with Plate No. ABC 321 to B for
P300,000.00. When the car was delivered to B, he found
out that the stereo and air-conditioning unit of the car
were no longer there. Does S have the right to remove
the car’s stereo and air-conditioning unit?
a. Yes, because those things are not included in the sale.
b. No, because when the thing to be delivered is a
generic thing, accessions and accessories are included
even though not mentioned.
c. Yes, because S is the seller.
d. No, because when what is to be delivered is a specific
thing, accessions and accessories are deemed
included even though not mentioned.
24. On April 20, 2014, Dante obliged himself to give Carlito
P500,000.00 if Carlito will marry Sofia on or before
December 10, 2014. Which of the following statements
is not correct?
a. The obligation of Dante is demandable if Carlito
marries Sofia on or before December 10, 2014.
b. The obligation of Dante is extinguished if it is
already January 1, 2015 and Carlito has not yet
married Sofia.
c. The obligation of Dante is extinguished on December
1, 2014 if Sofia dies on the said date and C has not
yet married Sofia
EXCEL PROFESSIONAL SERVICES, INC.
d. The obligation is demandable if Carlito marries Sofia
on December 15, 2014.
25. B bought a gold necklace with a heart-shaped pendant
from S for the price of P20,000.00. After payment of the
price, he requested S to put it in a small box and wrap it
with a birthday wrapper because he will give it as a
birthday gift to his girlfriend. After the birthday of his
girlfriend, she happily showed the gold necklace and
expressed her gratitude to B, who discovered that the
necklace has a square-shaped pendant and of very low
quality, which is different from the one he purchased
from S. What remedy is available to B as against S in this
case?
a. File action for the annulment of the contract of sale
b. File action for rescission of the contract of sale
c. File an action for the return of the purchase price
d. File an action for damages
26. X orally agreed to sell his cell phone, worth P8,000.00, to
Y for only P3,500.00 payable on September 30, 2012. Y
initially paid P400.00 and they agreed that the balance
shall be payable upon the delivery of the cell phone on
September 30,2012. The oral contract between them is:
a. unenforceable because the value of the object is more
than P500.00.
b. valid because the price has been partially paid
c. rescissible because the price is very low or inadequate
d. none of the above is correct.
27. Which of the following contracts is valid?
a. A agreed to pay B P1M if Y can swim across the
Pacific Ocean in four hours
b. M, a fourteen-year old student, was authorized by his
professor to sell the latter’s car and M sold it to their
Barangay Captain
c. S promised to give his car to B next year if he will
take the CPA Board Exams. The promise is in
writing
d. S, the only son of H and W, sold the family rest
house in Baguio, which he will inherit from his
parents
28. Which of the following statement about fraud is not
correct
a. The law does not allow waiver of an action for future
fraud.
b. Damages arising form fraud can not be mitigated or
reduced by the courts unlike damages arising from
negligence especially if there is contributory
negligence.
c. Waiver of past fraud is valid
d. Waiver of future fraud is valid
29. F disappeared without his whereabouts having been
known sometime in 2003. Whereupon in 2005, W, his
wife, sold his house and lot worth P10,000,000 for only
P7,000,000 in favor of T in order to support the family. In
2007, F resurfaced and began staying with his family. In
2012, F decided to file an action to rescind the contract
with T. In this case:
a. The contract of W with T is valid and, therefore,
rescission will not be available as a remedy.
b. If F can return the P7,000,000 to T and the house and
lot has not been sold to a buyer in good faith, he can
validly ask for rescission.
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c. Even if F can return the P7,000,000 and the house
and lot has not been sold to a buyer in good faith,
rescission will not lie because more than 4 years had
elapsed from the reappearance and, therefore, his
right to rescind has already prescribed.
d. Correct remedy not indicated.
30. A conferment of a direct benefit in a contract between
two persons in favor of a third person who must accept
such benefit before the same is withdrawn is known as:
a. Stipulation por autrui
b. Policitacion
c. Pactum reservati dominii
d. Counter-offer
31. Arnold mortgaged his Truck to Benito to secure his loan
amounting to P400,000.00. Due to the negligence of the
typist, the document signed by Arnold and Benito shows
that the truck of Arnold was sold to Benito for
P350,000.00. Which of the following statements is
correct?
a. The contract of sale between Arnold and Benito is
voidable because of mistake.
b. The contract of sale between Arnold and Benito is
relatively simulated.
c. The contract of sale between Arnold and Benito is
rescissible because of the damage suffered by Arnold
d. The contract of sale between Arnold and Benito may
be reformed
32. Which of the following contract of partnership is valid?
a. A universal partnership of all present property
between husband and wife.
b. A universal partnership of profits between a common
law husband and wife.
c. A universal partnership of all present property
between a private individual and a public officer.
d. A particular partnership between husband and wife.
33. Linda and Vicky were general partners in a kitchen
equipment business. On behalf of the partnership, Linda
contracted to purchase 10 stoves from Gregorio.
Unknown to Gregorio, Linda was not authorized by the
partnership agreement to make such contracts. Vicky
refused to allow the partnership to accept delivery of the
stoves and Gregorio sought to enforce the contract. In this
case, Gregorio will
a. Lose, because Linda’s action was not authorized by
the partnership agreement.
b. Lose, because Linda was not an agent of the
partnership.
c. Win, because Linda had express authority to bind the
partnership
d. Win, because Linda had apparent authority to bind
the partnership.
34. The following except one, are the legal characteristic of
partnership. Which is the exception?
a. There is mutual agency among partners.
b. The partners are liable pro-rata for the contractual
liabilities of the partnership.
c. All the partners are liable after exhaustion of
partnership assets to the extent of their personal
property.
d. It has juridical personality separate and distinct from
the partners.
35. Which of the following is not an obligation of a partner?
a. To give his capital contribution
b. Not to engage in unfair competition with the
partnership
EXCEL PROFESSIONAL SERVICES, INC.
c. To pay partnership for damages suffered by it through
his fault
d. To inspect and copy partnership books
36. Which is not a ground for the automatic dissolution of a
partnership?
a. By the death of any partner
b. By the civil interdiction of any partner
c. By the incapacity of any partner to perform his part
of the partnership contract
d. By the insolvency of any partner or of the
partnership.
37. A partnership can become an incorporator of a
corporation.
Where the contribution to the partnership consists in real
properties and the contract is entered into verbally, the
partnership contract becomes void.
a. Both statements are true
b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.
38. It also becomes void if the contribution is P3,000 or more
where the contract is entered into orally.
In a universal partnership where its nature is not
specified, the presumption is that a universal partnership
of all profits only is formed.
a. Both statements are true
b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.
39. Partner A is the sole manager of ABC partnership to
which X is indebted in the amount of P100,000 and who
is also indebted to A personally for P50,000. A collects
from X P45,000 and gives a receipt in his own name.
Under the law, A is obligated to give the partnership
P15,000 as its proportionate share in the collection.
Every partner is an agent of the partnership for the
purpose of its business and may generally exercise alone
acts of administration.
a. Both statements are true
b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.
40. Corporations and partnership are created only with the
consent of the State.
There can be partnership with 150,000 partners.
a. Both statements are true
b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.
41. The assets of the partnership in liquidation consists in the
assets and properties of the partnership and also the assets
and properties of the individual partners.
The law fixes the period of liquidation of partnership
affairs for two (2) year.
a. Both statements are true
b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.
42. A partner is duty bound to deliver to the partnership
everything that he may have received by reason of the
formation, conduct or liquidation of the partnership
business.
A partner may associate another person together with him
in his share in the partnership.
a. Both statements are true
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b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.
43. A partner may associate another person together with him
in his share in the partnership. Should such partner in be
the sole manager, the person associated automatically
becomes a partner in the partnership.
Notice and knowledge of one partner acting within the
scope of his authority and while then present in his mind
is notice and knowledge of all the partners.
a. Both statements are true
b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.
44. A partner appointed as manager in a contract other than
the articles of partnership may be removed with or
without cause.
A partner's rights to inspect or examine the books and
records of the business may be exercised personally or by
representative.
a. Both statements are true
b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.
45. The following are the effect of unlawful partnership
except:
a. Unlawful partnership has no legal personality
b. Partners forfeit their share in the profit
c. Partners forfeit their capital whether or not it becomes
an instrument or effect of the crime.
d. Judicial decree is no longer required.
46. The rule is that the designation of the share of the partners
in the profits and losses cannot be entrusted to only one of
the partners but to all. However, the rule allows the
designation of the share of the partners to be entrusted to
a third which can be questioned or impugned by the
partners if such designation is manifestly inequitable.
Within what time should the action or question be
brought?
a. Within one (1) month from the time he had
knowledge.
b. Within two (2) months from the time he had
knowledge.
c. Within three (3) months from the time he had
knowledge.
d. Within six (6) months from the time he had
knowledge.
47. Statement I - In a contract of partnership, two or more
persons bind themselves to contribute money, property
and industry to a common fund, with the intention of
dividing the profit among themselves.
Statement II - One or more persons may form a
partnership for the exercise of profession.
a. Both statements are true
b. Both statement are false
c. 1st statement is true and 2nd statement is false
d. 1st statement is false and 2nd statement is true
48. A and B agreed to contribute their respective farms to
form In general, to show the existence of a partnership,
three (3) of the following characteristics must be proved.
Which is the exception?
a. There was a joint interest in the profits.
b. There was an agreement in writing.
c. There was an intention to create a partnership.
EXCEL PROFESSIONAL SERVICES, INC.

d. There was a common or joint fund obtained from

contributions.
49. The conveyance of the whole interest of a partner in the
partnership of itself dissolves the partnership.
A partner has an interest in specific partnership property
which he can assign to anybody, according to his will or
discretion.
a. Both statements are true
b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.
50. Co-ownership or co-possession of itself establishes a
partnership provided the co-owners or co-possessors
divide the produce from the thing owned in common.
Sharing of gross returns does not of itself establish a
partnership unlike the sharing of the net profits of a
business.
a. Both statements are true
b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.

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