NOTE: 2nd pre-board NCPAR oct.

2010 board exam to be consolidated with

taxation

1. This refers to an encumbrance imposed upon an immovable for the

benefit of another immovable belonging to a different owner.
a. Easement or servitude.
b. Real estate mortgage.
c. Pledge.
d. Chattel mortgage.

2. In three of the following cases, the buyer is not entitled to suspend

the payment of the price. Which one will give him the right to suspend
payment
a. Disturbance in the possession or ownership of the thing purchased.
b. The seller gives him security for the return of the price.
c. It has been stipulated that the buyer shall pay the price
notwithstanding any disturbance.
d. The disturbance is a mere act of trespass.

3. “P” authorized “A” to sell his brand new car on his behalf. “A” sold it
to a buyer in good faith. However the contract executed by the agent
did not disclose his principal. In effect, “A” was acting in his own
name. Which is correct?
I. In case of hidden defects, the buyer can sue “P” for breach of
warranty.
II. The contract executed by “A” binds “P” even if “A” did not
disclose his principal.
III. The contract is binding on “A” only because “A” acted in
his own name without disclosing his principal.
a. Only I is correct c. Only III is correct
b. Only I and II are correct d. Only II is correct

4. A kind of mortgage which, although lacking some formality, form of

words, or requisites prescribed by law, shows 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.

5. A contract of sale is not a:

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

6. The Recto Law applies to which of the following examples of sale?

a. Sale of a car on straight term.
b. Sale of house and lot on installment.
c. Sale of car on installment where the buyer constituted a mortgage
on his truck.
d. Sale of a piano on installments where the buyer constituted a
chattel mortgage on the piano.

7. This refers to the warranty of the seller that he has the right to sell
the thing at the time when ownership is to pass, and which can be
enforced if the buyer is deprived of the property sold by a final
judgment in court.
a. Warranty against hidden defects.
b. Warranty of merchantable quality.
c. Warranty against eviction.
d. Warranty of possession.

8. In one of the following cases, the ownership of the thing object of the
contract is transferred to the other party upon delivery.
a. Contract to sell.
b. Agency to sell.
c. Sale on approval.
d. Sale or return.

9. It is an affirmation of fact or any promise by the seller relating to the

thing which has a natural tendency to induce the buyer to purchase
the same, relying on such promise or affirmation.
a. Condition.
b. False representation.
c. Warranty.
d. Seller’s talk.

10. Which of the following is not a rule in the interpretation of

contract?
a. If some stipulation of any contract should admit of several
meanings, it shall be understood as bearing that import which is most
adequate to render the contracts effectual.
b. Word which may have different significations shall be
understood in that which is most in keeping with the nature and
object to the contract.
c. In order to judge the intention of the contracting parties,
their contemporaneous and subsequent acts shall be principally
considered.
d. Although the cause is not stated in the contract, it is
presumed that it exists and is lawful unless the debtor proves the
contrary.

11. The following are the modes of extinguishing an agency, except:

a. Death, civil interdiction, insanity or insolvency of the principal or
agent
b. Accomplishment of the purpose of the agency
c. Expiration of the period for which the agency was constituted
d. Continued losses on the part of the principal or agent

12. The following cases were presented to you for evaluation:

I. A bilateral contract depends upon the agency
II. The agency is a means of fulfilling an obligation previously
contracted
III. The agency is one where a partner was appointed manager in
the contract of partnership and the removal of the partner from the
management is unjustifiable
In which of the above cases is the principal not allowed to revoke the
agency?
a. I and II
b. II and III
c. I and III
d. I, II and III

13. When two persons contract with regard to the same immovable
thing, one of them with the agent, and the other with the principal,
and the contracts are incompatible with each other, ownership shall
be transferred to:
a. The first purchaser in good faith
b. The first who completed the payment of the price in good faith
c. The first who will register in good faith the transaction
d. The one who presents the oldest title who must be in good faith

14. The following statements pertain to either a commission agent

or a broker
I. He has a relation not only with his principal, and the buyers or
sellers, but also with the property which is the object of the
transaction
II. Maintains no relation with the thing he purchases or sells
III. The goods are placed in his possession and disposal
IV. He is merely an intermediary whose function is to bring the
parties to the transaction
Determine whether the above statements pertain to commission agent
or broker
a. I and III pertain to a commission agent
b. I and IV pertain to a commission agent
c. II and III pertain to a broker
d. I and IV pertain to a broker

15. P, the owner of a certain car, wanted to sell the car. A learned
that P was selling the car. Without the authority of P, A sold the car in
his (A’s) name to B. What is the status of the sale of the car?
a. Valid between A and B but A must be able to transfer the ownership of
the car to B at the time of delivery
b. Unenforceable against P because he did not authorize A to sell the car
c. Void because A was not the owner of the car at the time of sale
d. Voidable because the sale was without the consent of P

16. Pedro, a Filipino who was on a business trip in Timbuktu,

learned that Federico, also a Filipino, was interested in buying his lot
located in Fairview, Quezon City. To take advantage of the
opportunity, he made an overseas call to Almario, his business
associate who was in Manila, to sell the lot in his (Pedro’s) behalf, to
Federico, for P1,000,000.00 cash. Almario thus sold the lot promptly
to Federico. The contract of sale was in a public instrument which
was signed by Almario in behalf of Pedro as seller, and Federico as
buyer. The said contract of sale is:
a. Valid, because it is in a public instrument and Almario was duly
authorized to represent Pedro
b. Void, because the authority of Almario was not in the form required by
law
c. Unenforceable, because Pedro did not sign the contract of sale and so
he had no consent thereto
d. Rescissible, because the contract was entered into in representation
of an absentee

17. A contract in which a person literally contracts with himself is

a. Adhesion contract c. Accessory contract
b. Auto contract d. Unilateral contract
18. Which of the following is not a prohibition on a limited partner?
a. Surname of a limited partner may not appear in the partnership name.
b. Limited partner may not take part in the control of the business.
c. Limited partner may not contribute services.
d. Limited partner may not constitute his assignee as substitute limited
partner.

19. A and B are partners in Ace partnership. While A was

performing his duties as a partner in the conduct of the business, he
negligently caused damaged to X, a third person. Who shall be liable
to X and in what capacity?
a. Only the partnership shall be liable it being a juridical person
separate and distinct from the partners.
b. b. Only A shall be liable for he is the only one at fault.
c. c. Both A and B shall be liable solidarily to X.
d. A, B, and the Partnership are all liable solidarily to X.

20. A, B, C entered into an oral contract of partnership each

contributing P1M each to the common fund plus other personal
properties of the same amount and failed to register the partnership
with the SEC. Is the partnership valid?
a. No, because every contract of partnership having a capital of three
thousand pesos or more in money or property must be in public
instrument and registered with the SEC.
b. Yes, because public instrument is necessary only in case of
contributions of immovables.
c. Yes, because a partnership contract can always be oral.
d. No, because registration with the SEC is essential for a partnership to
be valid and acquired juridical personality.

21. D mortgaged his car to C as security for a loan. Failing in the

payment of the loan, C foreclosed the chattel mortgage and sold the
car at public auction. In case of deficiency, is D liable for it ?
a. Yes, in the absence of contrary stipulation.
b. No, because it would be unjust enrichment on the part of creditor.
c. Yes, if so agreed upon by the parties.
d. No, unless stipulated.

22. A, B, and C, capitalist partners each contributed P 30, 000, P 20,

000 and P 10, 000, respectively and D, the industrialist partner,
contributed his services. Suppose X, a customer, is the creditor of the
firm to the amount of P 180, 000. Can he recover the P180,000?
a. X must sue the firm and get P 60, 000 from all the partners including
D, the industrial partner. X. can still recover the balance of P120, 000
from the four partners jointly.
b. X can recover from the firm P 60, 000. X can still recover the balance
of P 120, 000 from the capitalist partners only.
c. X can recover from the firm P 60, 000. X can recover the balance of P
120, 000 from any of their partners solidarily.
d. X can recover from the firm P 60, 000 and consider the balance of P
120, 000 as loss.

23. X, Y and Z were partners. X is an industrial partner. During the

first year of operation, the firm received a profit of P 60, 000. During
the second year, the firm sustained a loss of P 30, 000. In the Articles
of Partnership, it was agreed that the industrial partner would get 1/3
 of the profit. But would not share in the losses. How much will X, the
industrial partner get?
a. X will get only P 20, 000 which is 1/3 of the profit of the 1st year of
operation.
b. X will get only P 10, 000 which is 1’3 of the net profit
c. X will get only P 20, 000 in the first year and none in the second year.
d. X will share in the loss in the second year.

24. The partnership will bear the risk of the loss of three of the
following things. Which is the exception?
a. Things contributed to be sold.
b. Fungible things or those that cannot be kept without deteriorating.
c. Things contributed so that only their use and fruits will be for the
common benefit.
d. Things brought and appraised in the inventory.

25. A partner’s interest in the partnership is his share of the profits

and surplus which he may assign to a third person. Which of the
following statements concerning such right is correct?
a. The conveyance of a partner’s interest will cause the dissolution of the
partnership.
b. The assignee becomes a partner.
c. The assignee has a right to interfere in the management of the
partnership business.
d. The assignee has the right to receive the profits which the assigning
partner would otherwise be entitled to.

26. Torres is indebted for P5,000.00 to MACE Trading Company, a

partnership managed by Mendoza to whom Torres also owes
P10,000.00. The two debts which are both demandable are unsecured.
Torres remits P4,500.00 to Mendoza in payment of his debt to him.
Accordingly, Mendoza issues a receipt for his own credit. To which
credit should the payment be applied?
a. To Mendoza’s credit because the payment made by Torres is intended
for his debt to Mendoza who issues his own receipt.
b. To both the partnership credit and Mendoza’s credit proportionately
at P1,500.00 and P3,000.00, respectively.
c. To Mendoza’s credit because its amount is greater than that of the
partnership credit.
d. To the partnership credit because the managing partner should not
prefer his own interest to that of the partnership.

27. Which of the following stipulation is valid?

a. A stipulation excluding a capitalist partner from profits.
b. A stipulation exempting a capitalist partner from losses.
c. A stipulation exempting an industrial partner from losses.
d. A stipulation excluding an industrial partner from profits.

28. In three of the following wrongful acts of partners, the

partnership is solidarily liable with all the partners to third persons.
Which one is the exception?
a. For loss or injury cause to a third person by reason of the wrongful act
or omission of a partner acting in the ordinary course of business.
b. Where a partner acting within the scope of his apparent authority
receives money or property of a third person and misapplies it.
c. Where the partnership receives money or property of a third person in
the ordinary course of business and such money or property is
misapplied by a partner while it is in the custody of the partnership.
d. For loss or injury caused to a third person by reason of the use of
partnership property by a partner for personal purpose.

29. Which of the following statements is incorrect?

a. Partnership creditors are preferred as to partnership assets.
b. Partnership creditors are preferred as to each partner’s separate
assets.
c. A partner’s separate creditors are preferred as to the partner’s
separate assets.
d. A partner’s separate creditors may attach a partner’s share in the
partnership assets.

30. ••Fixed, savings, and current deposits of money in banks and

similar institutions shall be governed by the provisions concerning
simple loan
••The depository can demand that the depositor prove his ownership of
the thing deposited
a. Both are True b. Both are False c. only the first is true d. only the
second is true

31. ••A contract of deposit must be in writing

••The depositary can make use of the things deposited even without the
express permission of the depositor
a. Both are True b. Both are False c. only the first is true d. only the
second is true

32. ••The bailee in commodatum can lend or lease the object of the
contract to a third person
••When there are two or more bailees to whom a thing is loaned in the
same contract, they are liable jointly
a. Both are True b. Both are False c. only the first is true d. only the
second is true
 33. ••In commodatum one of the parties delivers money or
consumable thing upon the condition that the same amount of the
same kind and quality shall be paid
••In commodatum and mutuum ownership of the thing loan is
transferred to the borrower
a. Both are True b. Both are False c. only the first is true d. only the
second is true

34. ••In mutuum or loan, one of the parties delivers to another

something not consumable so that the latter may use the same for a
certain time and return it
••Mutuum is essentially gratuitous
a. Both are True b. Both are False c. only the first is true d. only the
second is true

35. “P” gave authority to “A” as follows: “I will make you my agent
for all my properties. You are authorized to perform and execute such
acts as you may consider proper and appropriate under the
circumstances. You are hereby given full, complete and unlimited
management and authority. (Signed) “P”. Which of the following is
correct?
I. “A” can compromise in behalf of “P” regarding his properties.
II. The agent can repudiate any inheritance due to “P”.
III. The agent may mortgage the properties of “P”.
IV. The agent may sell the properties of “P”.
a. III is only correct c. I, III and IV alone are
correct
b. III and IV only are correct d. All are incorrect