Junior Philippine Institute of Accountants

College of Business Administration

University of the East - Caloocan
Qualifying Exam Reviewer 2017
Business Law

1. On September 21, 2010, Piolo agreed to sell his only carabao to Sam and Sam agreed
to pay the price of P25,000 if Sam will pass the October 2010 CPA Examination. The list
of successful examinees was released on October 21, 2010 and Sam is one of those
who passed the examination. As a result,
a. Piolo is entitled to the
e P25,000 price plus interest beginning September 21, 2010.
b. Sam is entitled to the carabao and its fruits beginning September 21, 2010.
c. Sam is entitled to the carabao beginning September 21, 2010 and to its fruits
beginning October 21, 2010.
d. Piolo shall deliver
liver the fruits of the carabao and Sam shall pay the interest on the
price beginning September 21, 2010.

c. Sam is entitled to the carabao beginning September 21, 2010 and to its fruits
beginning October 21, 2010.

2. The following are elements of an obliga

obligation, except
a. Active and passive subjects
b. Efficient cause
c. Prescription
d. Vinculum

c. Prescription

3. S1: The debtor shall lose the right to make use of the period when he does not furnish
any guaranty or security to the creditor.
S2: In an obligation subject to a suspensive period, what is suspended is birth of the
obligation.
a. True;true b. true;false c. false;false d. false;true

c. false;false

4. I will give you my car provided that if I like to have it back, you will return the same to
me.
a. The obligation is void, because the fulfillment depends upon the will of the debtor.
b. The obligation is void, because the fulfillment depends upon the will of the creditor.
c. The obligation is valid because the condition merely causes the loss of rights already
acquired.
d. Both A and B.
 c. The obligation is valid because the condition merely causes the loss of
rights already acquired.

5. Which of the following is not a conditional obligation?

a. D to give C P1,000 if C passes the examination.
b. D to pay C P1,000 if he has the means.
c. D to give C a horse if C marries X.
d. D is to use Cs car until C returns from Davao.

b. D to pay C P1,000 if he has the means.

6. A, B and C are solidary debtors of X and Y, solidary creditors, for P60,000. X makes a
demand to A but the latter paid Y. In here, the obligation is not extinguished.
A and B solidary debtors of X, Y and Z, solidary creditors. X demands payment from A,
but B, upon whom no demand is made paid Z the entire obligation. In here, the
obligation is totally extinguished.
a. True;true b. true;false c. false;false d. false;true

a. True;true

7. Joy makes a not payable to the order of Christine in the amount of P10,000.00. Christine
indorsers the note Ali as follows Pay to Ali if he passes the 2015 Bar Examination.
a. Joy must wait for the condition to be fulfilled before he can pay Ali
b. Joy may pay Ali even if the condition has not been fulfilled but Ali has to hold the
proceeds subject to the rights of Christine.
c. Joy cannot be compelled to pay even if the condition is fulfilled because the
conditional indorsement renders the instrument non-negotiable.
d. Joy may Ali even if the condition has not been fulfilled. The fulfillment of the
condition becomes immaterial and Ali becomes the absolute owner of the
proceeds of the note.

b. Joy may pay Ali even if the condition has not been fulfilled but Ali has to
hold the proceeds subject to the rights of Christine.

8. Elmo is obliged to give Bert, either a ring worth P5,000; or bracelet worth P4,500; or a
watch worth P4,000. All the objects were lost due to Elmos fault in the order stated.
a. Elmos obligation is extinguished.
b. Elmos obligation is to pay the value of the ring plus damages.
c. Berts right is to demand the value of any of the objects plus damages.
d. Elmos obligation is to pay the value of the watch plus damages.

d. Elmos obligation is to pay the value of the watch plus damages.

9. A obliged himself to deliver the cans of powdered milk of B from his warehouse in
Pangasinan to Manila. While his truck was traveling on the North expressway, it was hi-
jacked by a band of robber who also took the cans of milk belonging to B. Is A liable for
the loss of the goods?
a. No, because they were generic things and as they cannot be lost.
b. Yes, because he was in possession of the same at the time of the loss and therefore
presumed at fault.
c. Yes, because there was no stipulation exempting him from loss in case of fortuitous
event.
d. No, because the loss was due to fortuitous event.

d. No, because the loss was due to fortuitous event.

10. Sister offered his car to Brother for P1M and giving the latter one week to decide.
Brother in turn gave Sister P1,000. In this case, there is
a. Contract of sale of the car with the P1,000 as earnest money
b. Contract of option with the P1,000 as option money
c. Contract to sell of the car at Bs option
d. Contract to sell of the car at Ss option

B. Contract of option with the P1,000 as option money

11. A defective contract because it is entered into in the name of another without or in
excess of authority, or it is verbal is
a. Unenforceable c. Void
b. Voidable d. Rescissible

a. Unenforceable

12. The following even if not in public instrument are valid, binding and enforceable except
a. Negotiable instruments
b. Sale of land, either by the owner or agent with written authority
c. Agency, pledge, mortgage
d. Partnership contract wherein immovables are contributed

d. Partnership contract wherein immovables are contributed

13. A holder is still a holder in due course although:

a. He received the instrument after it has become overdue but he has no
knowledge of it.
b. He received the instrument after it was dishonored and he has no notice of such
dishonor.
c. He did not give any value for it.
d. The instrument was not complete and regular on its face.
 b. He received the instrument after it was dishonored and he has no notice
of such dishonor.

14. These statements are presented to you:

I. An instrument payable on demand has no date of maturity.
II. When a transfer of an instrument is affected on the date of maturity, the holder is
considered to have taken the instrument when it is already overdue; hence, he is
no longer a holder in due course.

In you evaluation of the foregoing statements:

a. Both statements are true

b. Both statements are false
c. Only statement I is true
d. Only statement II is true

b. Both statements are false

15. A, agent of P, in excess of authority, entered into a contract in the name of P with X who
knew of the lack of authority and P did not ratify the contract. The contract is
a. Rescissible b. voidable c. unenforceable d. Void

d. Void

16. If a third person pays an obligation. What are the rights, which are available to him if he
pays the obligation with the knowledge and consent of the debtor?
1st answer He can recover from the debtor the entire amount, which he has paid.
2nd answer He subrogated to all of the rights of the creditor.
a. Both answers are correct. c. Only the first is correct.
b. Both answers are wrong. d. Only the second is correct.

a. Both answers are correct.

17. If the obligor binds himself to perform his obligation as soon as he shall have obtained a
loan from a certain bank. This obligation is
a. With a term c. with a period
b. With a suspensive condition d. with a resolutory condition

b. With a suspensive condition

18. The following are certain conditions in an instrument or the transfer thereof:
I. A condition placed on the face of the instrument that the maker will pay it to the
payee upon the fulfillment of the condition.
 II. A condition placed on an indorsement that the instrument will be paid upon the
fulfillment of the condition.
III. A condition placed upon the delivery of the instrument, such as when the maker
delivers the note to the payee and instructs him not to negotiate the instrument
until the maker obtains the proceeds of his loan.

In your evaluation of the above statements, the instruments that are negotiable or reman
negotiable despite the presence of the condition mentioned are:

a. I and II
b. II and III
c. I and III
d. I, II, and III
b. II and III

19. An action to impugn the acts of a debtor intended to defraud the creditor is
a. Accion reivindicatoria c. accion redhibitoria
b. Accion subrogatoria d. accion pauliana

d. accion pauliana

20. This contract is without effect unless ratified

a. Marriage between first degree cousins
b. Contract of sale between two insane persons
c. Contract of sale between a guardian and his ward
d. Donation between husband and wife

b. Contract of sale between two insane persons

21. S1: Consignation without tender of payment is sufficient if two or more persons claim the
same right to collect.
S2: When the debt of a thing certain proceeds from a criminal offense, the debtor shall
be exempted from the payment of the price of the thing is lost through a fortuitous event.
a. Both statements are true.
b. Both statements are false.
c. S1 is true; S2 is false.
d. S1 is false; S2 is true.

c. S1 is true; S2 is false.

22. The meeting of minds manifests consent after the acceptance upon the thing and the
cause which are to constitute the contract. Which of the following constitute a definite
offer?
a. An offer made through an agent.
b. Business advertisements of things for sale.
 c. Advertisements for bidders.
d. None of the above.

a. An offer made through an agent.

23. The acceptance that takes place when a drawee to whom a bill is delivered for
acceptance destroys the bill, or refuses within 24 hours after such delivery, or within
such other period as the holder may allow, to return the bill accepted or non-accepted, to
the holder.
a. Implied acceptance
b. Qualified acceptance
c. Constructive acceptance
d. Oral acceptance

c. Constructive acceptance

24. S1: In a natural obligation, the creditor has the right to enforce the performance thereof
it being based on positive law.
S2: Solutio indebiti and negotiorum gestio are quasi-contracts that give rise to civil
obligations.
a. True; True b. True; False c. False; False d. False; True

d. False; True

25. S1: Mara borrowed P10,000 from Clara. On due date, Mara paid the debt to Clara who had
become insane. If Clara kept only P6,000 and threw away P4,000, then payment will be
valid for only P6,000.
S2: Lea makes a note payable to bearer and delivers it to Mateo. The note, however, is lost
by Mateo and is picked up Lyka. Lyka goes to Lea to collect on the note. Lea pays Lyka
believing in good faith that Lyka is the intended bearer. Lea is still not released from liability.
a. True; True; b. True; False c. False; Fasle d. False; True

b. True; False

26. In order that condonation may extinguish an obligation involving a movable property whose
value exceeds P5,000.00
a. It is sufficient that the condonation and the acceptance are in writing, even a private one.
b. It is required that the condonation and the acceptance must be in a public instrument.
c. The delivery of the document evidencing the debt is sufficient since the property is
movable.
d. The condonation and the acceptance may be made orally.

a. It is sufficient that the condonation and the acceptance are in writing, even a
private one.
27. It is the manifestation of the meeting of the offer and the acceptance upon the thing which
are to constitute the contract
a. Consideration
b. Contract
c. Consent
d. Cause

c. Consent

28. M makes a promissory note for P10,000.00 payable to the order of P. After the issuance to
him of the note, P altered the to US$10,000.00. P then endorsed the note to A, A to B, and
B to H. Only P knew of the alteration.

The parties and their possible liabilities are:

I. M, P10,000.00
II. M, US$10,000.00
III. M, nothing
IV. A and B, P10,000.00
V. A and B, US$10,000.00
VI. A and B, nothing.
a. I and IV
b. II and V
c. I and V
d. III and VI

c. I and V

29. An employee embezzled a sum of money from her employer, and in order that she would
not be prosecuted, her husband signed a promissory note to pay the amount embezzled,
with interest to the victim. Which is correct?
a. The husband is liable because the note was executed by the husband voluntarily
b. The recovery shall be limited only to the amount embezzled without any interest
c. The employer may recover from the husband of the employee and may still prosecute
the employee
d. No recovery can be made on the note because the consideration is illicit

d. No recovery can be made on the note because the consideration is illicit

30. In order that fraud may make a contract voidable

a. It may be incidental but both parties should not be in pari delicto
b. It may be serious and the parties must be in pari delicto
c. It may be incidental but should have been employed by both parties
d. It should be serious and should have not been employed by both contracting parties
 d. It should be serious and should have not been employed by both contracting
parties

31. S1: A partnership is created by mere agreement of the partners while a corporation is
created by operation of law.
S2: In a partnership, juridical personality commences from the execution of the articles of
the partnership; in a corporation, from the issuance of certificate of incorporation by the
Securities and Exchange Commission.
a. True; True b. True; False c. False; False d. False; True

a. True; True

32. Three of the following contracts are void. Which one is not?
a. A universal partnership of all present property between husband and wife
b. A universal partnership of profits between a man and a woman living together as
husband and wife without the benefit of marriage
c. A particular partnership between husband and wife
d. A universal partnership of profits between a private individual and a public officer

c. A particular partnership between husband and wife

33. Partners Arnold, Ben and Charlie contributed: Arnold-P1,000,000; Ben-P2,000,000; and
Charlie-service. After exhausting the partnership assets, the creditors still have a claim for
P300,000. For how much are the partners liable to the creditors for the partnership liability?
a. Only Arnold and Ben are liable equally to the creditors being capitalists
b. Only Arnold and Ben are liable at 1/3 and 2/3, respectively
c. All of Arnold, Ben and Charlie are liable pro rata to the creditors
d. Charlie is not liable being an industrial partner who is exempt from losses

c. All of Arnold, Ben and Charlie are liable pro rata to the creditors

34. Joseph, Aris, Dex and Earl are partners in JADE Enterprises, a jewelry store, with Joseph
contributing P50,000.00; Aris, P20,000.00; and Dex, P30,000.00. Earl is an industrial
partner and manages the partnership. Based on the foregoing information, which one of the
following statements is false?
a. Joseph may engage in the buying and selling of rice without the consent of the other
partners
b. Earl may engage in the buying and selling of rice without the consent of the other
partners
c. Earl is not liable for the losses of the partnership
d. Earl may be held liable by third persons for partnership debts with her separate property

b. Earl may engage in the buying and selling of rice without the consent of the
other partners
35. Which of the following defences may a party to an instrument avail himself of against any
holder?
a. Want of delivery of incomplete instrument.
b. Want of authority to complete an instrument that was delivered.
c. Want of delivery of complete instrument.
d. Want or absence of consideration.

a. Want of delivery of incomplete instrument.

36. MARILEN Company is owned by the following partners with their respective contributions:
Mary, P10,000.00; Anna, P20,000.00; Rose, P30,000.00; Irma, P40,000.00; Liza,
P50,000.00; Edna, P100,000.00; and Nora, P200,000. Except for Edna and Nora, all the
rest are managers without any specification as to their respective duties. Mary wants to buy
goods from Excellent Company. Liza opposes. Anna and Rose side with Mary while Irma
sides with Liza.
a. The group of Mary will prevail because they constitute the majority.
b. The group of Liza will prevail because they constitute the controlling interest.
c. The group of Mary will prevail because they constitute the controlling interest.
d. Suppose Rose abstains, the group of Mary will prevail.

a. The group of Mary will prevail because they constitute the majority.

37. Which of the following renders an instrument non-negotiable?

a. The omission of the date of issue.
b. The omission of any statement that value has been given.
c. The omission of the place where the instrument was drawn.
d. The omission of the signature of the maker above his typewritten name.

d. The omission of the signature of the maker above his typewritten name.

38. What is the order of payment of liabilities of a dissolved general partnership using the code
number representing each liability?
I. Those owing to partners than for capital or for profits
II. Those owing to creditors other than partners
III. Those owing to partners in respect of profits
IV. Those owing to partners in respect of capital
a. I, II, III, IV
b. II, I, IV, III
c. II, I, III, IV
d. I, II, IV, III

b. II, I, IV, III

39. The articles of incorporation differ from the by-laws in that the articles of incorporation are:
 a. The rules of action adopted by a corporation for its internal government
b. Adopted before or after incorporation
c. A condition precedent in the acquisition by a corporation of a juridical personality
d. Approved by the stockholders if adopted after incorporation

c. A condition precedent in the acquisition by a corporation of a juridical

personality

40. Which of the following is a common liability of the drawer, maker, and acceptor?
a. The admission of the genuineness of the signature of any indorser.
b. The admission of the existence of the payee and his capacity of the payee to
indorse.
c. The admission that the instrument is covered with sufficient funds.
d. The engagement on the payment of the instrument according to its tenor.

b. The admission of the existence of the payee and his capacity of the
payee to indorse.

41. A corporation acquires juridical personality

a. Upon the filing of the articles of incorporation
b. Upon the filing of the by-laws
c. Upon the issuance of the certificate of incorporation
d. Within 30 days from the receipt of the notice of the issuance of the certificate of
incorporation

c. Upon the issuance of the certificate of incorporation

42. A delinquent stockholder is not entitled to the following rights, except

a. To be voted
b. To vote or be represented in the meetings of stockholders
c. To dividends
d. He is not entitled to all the rights of a stockholder

c. To dividends

43. All of the following, except one are qualifications of a director or trustee. Which is it?
a. He must be the owner of at least 1 share of stock which shall stand in his name on the
books of the corporation
b. Majority of the directors or trustees must be residents of the Philippines
c. The number must not be less than 5 not more than 15
d. In case of a non-stock corporation, a trustee is not required to be a member of the
corporation

d. In case of a non-stock corporation, a trustee is not required to be a member of

the corporation
44. Consider the following statements on the interpretation of instruments:
I. Where the sum payable is expressed in words and also in figures and there is a
discrepancy between the two, the sum denoted by the words is the sum payable.
II. Where there is a conflict between the written and printed provisions of the
instrument, the printed provisions prevail.
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.

c. Statement I is true; statement II is false

45. S1: The removal of a director must take place in a regular meeting of the corporation or in a
special meeting called for the purpose.
S2: The election must be made through the raising of hands if requested by any voting
stockholder or member. If there is no such request, voting may be made through other
means like secret ballot.
a. True; True b. True; False c. False; False d. False; True

b. True; False

46. Which of the following subscriptions does not comply with the subscription and paid-up
capital requirements at the time of incorporation?
Authorized Subscribed Paid-up
a. P1,000,000.00 P250,000.00 P62,500.00
b. 300,000.00 75,000.00 50,000.00
c. 100,000.00 100,000.00 100,000.00
d. 50,000.00 12,500.00 3,125.00

d. 50,000.00; 12,500.00; 3,125.00

47. A corporation may acquire its own shares for a legitimate purpose provided it has
unrestricted retained earnings. In which of the following acquisitions is the requirement of
unrestricted retained earnings not imposed?
a. When the acquisition is made to eliminate fractional shares
b. When delinquent shares are acquired in a delinquency sale
c. When redeemable shares are repurchased in accordance with the terms provided in the
articles of incorporation
d. When shares are acquired from stockholders who exercise their appraisal right

c. When redeemable shares are repurchased in accordance with the terms

provided in the articles of incorporation
48. Fatima Corporation has a statement of capital stock in its articles of incorporation but it was
stated in the same articles that dividends are not supposed to be declared , that is , there is
no distribution of retained earnings. Fatima Corporation is:
a. Stock corporation c. Corporation by prescription
b. Non-stock corporation d. Corporation by estoppels

b. Non-stock corporation

49. How many number of votes of the board of directors are required to change the name of a
corporation?
a. 2/3 of all members of the board
b. 2/3 vote of all present
c. Majority vote of all present constituting a quorum
d. Majority vote of the board

c. Majority vote of all present constituting a quorum

50. In the matter of managing the business of the corporation, the exercise of corporate power
and handling of corporate properties this is supreme:
a. 2/3 approval of the stockholders of the corporation
b. Majority vote of the OCS of the corporation
c. Majority vote of the Board of Directors
d. The President of the corporation.

c. Majority vote of the Board of Directors