Page 1 of / | Kr rnysicar manuvut uv READ Lavon obo EXCELLENCE MAZORES, 8. BAKILAN, & E, BANGGAWAN LAW ON OBLIGATION M.AZORES, B. BAKILAN, & E. BANGGAWAN 1. Definition 2. Sources of obligations and their concepts a Law b. Contracts ¢. Quasi-contracts d. Delicts e. Quasi-deticts 3. Kinds of Obligations a. Pure/Conditional/Obligation with a Term b. Solidary Joint Obligations ¢. Alternative/ Facultative Obligations d._Divisible/ indivisible Obligations e. Obligation with a Penal Clause 4, Specific circumstances affecting obligations in general a. Fortuitous Events b. Fraud c. Negligence d. Delay e. Breach of contract 5. Nature and Effects of Obligations a. Concurrent Obligations in obligations to give a specific/determinate thing b. Obligations to do or not to do ©. Remedies in case of non-performance d. Damages 6. Extinguishment of obligation with special emphasis on a. Payment of debts of money b. Mercantile documents as means of payment c. Special forms or mode of payment © Dation in payment ‘* Application of payments + Payment by cession ‘Tender of payment and consignation d. Loss of the thing due, remission or condonation, confusion, compensation, and novation Drill Problems: 1. Mira is a famous singer from Cebu. She is under an exclusive talent management contract with Star Circle Inc. for five years. On Mia's third year with Star Circle Inc, she was offered by Amakabogera Corporation an exclusive contract with a more attractive pay and benefits. Mira was enticed by the offer and accepted it. Star Circle Inc, sues Mira for damages, is Mira liable for damages? a. No, the exclusive contract is void for being contrary to public policy. b. Yes, because she is liable for fraud. cc. No, forcing Mira to stay in the contract will constitute as involuntary servitude. d. Yes, because she contravened the tenor of her contract with Star Circle, Inc. 2. The creditor has a right to the fruits of the thing from: a. Perfection of the contract b. The obligation to deliver it arises pokey asain ae) ea em ie a aera eatery eee nn REAL EXCELLENCE ONLINE CPA REVIEW © (074) 6656774 @ 0919093 8620: @ support@reocpareview ph MAY CPA REVrage es 18 mye SEG y REAL M.AZORES, 8. BAKILAN, & €, Bay EXCELLENCE liwen oy ©. Delivery d. Payment te thing? 3. Which ofthe following is not a remedy of a creditor if there was failure to deliver an indeterminate thing a. Rescission of the contract b. Recover damages ¢. Compel delivery of a thing of superior quality than what was agreed d. Ask that the obligation be complied with at the expense of the debtor 4. That which binds or connects the parties to the obligation a. Active subject b. Prestation c. Passive subject dd. Vinculum juris 5. These obligations do not grant a right of action to enforce their performance, but after voluntary fulfillment by the obligo! they authorize the retention of what has been delivered or rendered by reason thereof. a. Civil obligations b. Moral obligations ¢. Natural obligations d._ Positive obligations 6. Which of the following is an example of an accession? a. Key toacar b. Tree ona piece of land c. Bracelet of a watch d._Allofthe above 7. April sold to Ria a piece of land with fruit bearing trees. Even when the land was delivered to Ria, April continued gathering the fruits of the trees. Ria opposed and said that she already owns the trees, while April said that their deed of sale does not mention the trees and thus it's not included in the sale. Is April correct? a. Yes, because the contract does not mention the trees. b. No, because it is deemed included in the sale of the land. . No, because April should pay Ria for the fruits she gathered d._ Yes, because she only sold the land. 8. Roy obliged himself to deliver a car to Beth on December 19, 2022. However, the car was damaged by the flood caused by typhoon Odette on December 15, 2022. On December 19, 2022, Beth asked Roy to deliver the car but Roy said that his obligation is already extinguished. Is Roy correct? a. Yes, because the car was lost due to fortuitous event. b. No, because he should have saved the car from the typhoon. c. Yes, because the obligation is unilateral 4. No, because the thing is generic. 9. Damages may be claimed in the following instances, except ‘ a. Fraud b. Negiigence c. Fortuitous event d. Delay 10. This is delay on the part of the debtor a. Mora solvendi b. Mora accipiendi cc. Mora delicti d. Compensatio morae 11. This type of fraud vitiates a contract and makes it voidable a. Dolo causante b. Dolo incidente ©. Dolo solvendi 4d. Dolo accipiendi cy. Convenience IE CPA REVIEW9, S Ye ‘esp REAL oa EXCELLENCE ‘M.AZORES, B, BAKILAN, & E. BANGGAWAN , Law on Obligations Page 3 of 7 | RFBT Physical Handout 01, +2. This is the right of the creditor to exercise all of the rights and bring all the actions which his debtor may have against third persons a. Accion subrogatoria b. Accion pauliana ¢. Accion reinvindicatoria 4. Accion publiciana 13. This is the right of the creditor to attack or impugn by means of rescissory action any act of the debtor which is in fraud and to the prejudice of his rights as creditor. a. Accion subrogatoria b. Accion pauliana . Accion reinvindicatoria d. ° Accion publiciana 14..In an obligation to give a determinate thing, if the thing deteriorates without the fault of the debtor: a. The obligation is extinguished, b. The debtor is liable for damages. ¢. The impairment is borne by the creditor. d._The impairment is shared by the debtor and creditor. 15. Specific performance may not be possible in this civil obligation a. A,a painter, obliges himself to paint the portrait of B on January 8, 2021 b. C,a farmer, obliges himself to give his only cow to D on February 14, 2021 c. E,aveterinarian, obliges himself to give one of his dogs to F on May 1, 2021 d. G, a registrar of deeds, obliges himself to effect registration of H's parcel land on June 20, 2021 16. A was employed as professional driver of B Transit Bus owned by C. In the course of his work, A hit a concrete post causing serious injury to passenger W and pedestrian Y. The victims sued the driver and the owner of the bus for damages. Which of the following statements is correct? a. C is not liable if C can prove that he exercised the diligence of a good father of a family in the selection and ‘supervision of his employee b.- The conviction of A in a criminal case makes C subsidiary liable for damages arising from criminal act c. The liability of C shall cease if the driver A is acquitted in the criminal case d. The guilt of driver A must be established beyond reasonable doubt to make C liable 17. With regard to the right as to the fruits of the thing, which is not correct? a. Ifthe obligation is subject to a suspensive condition, the obligation to deliver arises from the moment the condition happens. b. If the obligation is subject to a suspensive period, the obligation to deliver arises upon the expiration of the term or riod. c. Irthere is no condition or term for its fulfillment, the obligation to deliver arises from the perfection of the contract or creation of the obligation d.- If the obligation arises from a contract of sale, the vendor has a right to the fruits of the thing from the time the obligation to deliver arises 48. The following except one, are included in civil liability. The exception is a. Restitution b. Reparation cc. Indemnification d. Starvation 49. Statement 1: A commits the crime of theft and is asked to return the car to its owner B. But before the car was about to be delivered to B, it was destroyed by a fortuitous event. Is A's liability extinguished? Statement 2: Using above statement, A had previously asked the owner to accept the car, but the owner without any justifiable reason refuses to accept the car, and it was destroyed by 2 fortuitous event. Is A's liability extinguished? a. Yes, Yes b. No, Yes c. Yes, No d, No, No 20, Dwayne obliged himself to give 6,000,000 pesos to Taylor if she can walk from Manila to Davao in 24 hours. The oblig a. Unenforceable b. Void c. Voidable d. Valid but the condition is void : é ’ Effectiveness. Efficiency. Convenience ee IMP INE REAL EXCELLENCE ONLINE CPA REVIEW @ (074) 665.6774 @ 0919093 8620 © support@reocpareview.ph_ MAY 2023 CPA REVIEW SEASONpepe ce som 3 EXCEI M.AZORES, B. BAKILAN, & E: Ban) EXCELLENCE Ee ani 21. The debtor loses the benefit of the period in the following cases, except od a. When he does not furnish to the creditor the guaranties or securities which he has promisé b. When the thing he is bound to deliver is lost through fortuitous event cc. When the debtor attempts to abscond &. When the debior violates any undertaking, in consideration of which the creditor agreed to the eriod te anti the phone we 22, John bound himsel to delver to Mark a watch, a bag or a phone, at Mark's option. The watch and the PI stolen because John left them unattended. Mark may: a. Ask the delivery of the bag with damages b. Claim the price/value of the watch or phone with damages c. Claim the price/value of all of the three items. d. Allofthe above 23. Which of the following statements is correct? ly w a. A joint indivisible obligation extinguishes the obligation from the time any one of the debtors does not comply his undertaking. b. Ifthe obligor is guilty of fraud in non-fulfillment, he can just pay the penalty to substitute the indemnity for damage and payment of interest. ¢. Adebtor can be compelled to accept partial payment. d._ The thing to be delivered may be divisible, yet the obligation may be indivisible. 24. Whenever in an obligation a period is designated, it is presumed to have been established for the benefit of: a. The creditor b. The debtor c. Both the creditor and the debtor d. The third-party beneficiary 25. When there are several debtors or creditors, but the prestation is indivisible, by default, the obligation is: a. Joint b. Solidary c.- Void d. Indivisible 26. Rachel, 25, Ross, 35, and Emma, 17, are solidary debtors of Chandler in the amount of P90,000.00 a. Chandler may collect from Rachel P90,000. b. Chandler may collect from Rachel P60,000. ¢, Chandler may collect from Rachel P10,000. d. Chandler may collect nothing because the obligation is voidable, Emma being a minor. 27. A, B and C borrowed P24,000 from Y and Z and signed a promissory note dated January 30, 2021, and due within six months. How much can Y collect from A (debtors are solidary while creditors are joint), on due date? a. P12,000 b. P4,000 . c. P8,000 d. P24,000 28. X obliged himself to pay Y the amount of P30,000 30 days after January 31, 2014 plus a Penalty of P3,000 if he fails to pay the obligation on due date. After demand for payment by Y, X offered to Pay on June 30, 2014. Y can demand from x: a. P30,000 plus P3,000 plus legal interest. P30,000 plus P3,000 b. P30,000 plus legal interest d. P30,000 plus P3,000 plus legal interest plus damages 28. Which of the following is not correct? a. The effect of the conditional obligation to give, once the condition has been fulfilled, shall retroact to the day of the fulfillment of the condition b. When the obligation imposes reciprocal prestations upon the parties, the fruits and interests during the pendency of the conditional shall be deemed to have been mutually compensated €. Ifthe obligation is unilateral, the debtor shall appropriate the fruits and interest received, unless the nature and circumstances of the obligation it should be inferred that the intention of the persons constituting the same was different 4d. In obligation to do and not to do, the court shall determine in each case, the retroactive effect of the condition that has been complied with REO CPA REVIEW PHILIPPINES si Effectiveness. Efficiency. Convenience eocpareview.ph . REAL EXCELLENCE ONLINE CPA REVIEW 1) 65 6774 @ 0919 083 8620 @ support@reocpareview.ph ‘MAY 2023 CPA REVIEW SEASONsy 7 Page 5 of 7 | RFBT Physical Handout 01 iy REAL si EXCELLENCE HAE OE at J. A, B, and C solidarily owe D and E P30, 000. D remitted the entire obligation in favor of A without the consent of E. The effect is a. Acannot recover from B and C because remission in her favor extends to be benefit of B and C b. Acan recover from B and C their respective share of the debt . The obligation is not extinguished until A collects from B and C d. The obligation is not yet extinguished until E is paid by D of her share of the credit 31, Facultative as distinguished from alternative obligation a. The right of choice is given only to the debtor b. Various things are due, but the giving of one is sufficient c. {fone of the prestations is illegal, the others may be valid and the obligation remains d._Ifitis impossible to give all except one, that last one must still be given 32. A, B and C executed a promissory note binding themselves to pay P9,000 to X, Y and Z. The note is now due and demandable. Can the creditors proceed against A alone for the payment of the entire debt? a. No, each creditor can collect only 3,000 from A b. Yes, either X.Y or Z can collect P9,000 from A . No, each creditor can collect only P1,000 from A. d. Yes, since the promissory note is silent with respect to the rights of the creditors, the obligation is presumed to be solidary 33. Using the preceding number, suppose that C is insolvent, can A and B held liable for C's share in the obligation? a. Yes, the debt shall be presumed to be divided into as many equal shares as there are debtors b. Yes, but A and B will be liable proportionately ¢. No, the debts are considered distinct from one another d. No, only either A and B but not both will be liable 34. A executes in favor of B a promissory note for P'1,000,000 payable after two years, secured by a mortgage on a building valued at P2,000,000. One year after execution of the note, the mortgaged building was totally burned. Can B demand from A the payment of the value of the note? a. Yes, if Ais willing to pay B b. No, if A refuses to pay B c. Yes, even if A gives another security which is equally satisfactory d. Yes, unless A gives another security which is equally satisfactory 35. D obtained from ABC Bank a loan of P12,000,000 payable at the end of 10 years. Before maturity, an extraordinary inflation supervened causing the value of the debt to fall to P4,000,000 on the date of maturity. On due date, D must pay ABC Bank: a. 12,000,000 b. 4,000,000 cc. P36,000,000 4. P3,000,000 36. In order that condonation may extinguish an obligation involving a movable property whose value exceeds P§,000.00 a. Itis sufficient that the condonation and the acceptance are in writing, even a private one. b. Ibis required that the condonation and the acceptance 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. 37. Sarah has a savings account with Patatas Bank in the amount of 1,000,000 pesos. Sarah obtained a car loan from Patatas Bank in the amount of 1,500,000, payable in 15 equal monthly installments. Sarah issued in favor of the bank post-dated checks, each in the amount of P100,000.00. On the sixth, seventh and eight months, the corresponding checks bounced. The Bank then deducted the remaining balance of 1,000,000 from Sarah's account. Was the action of the bank valid? a. No, because there was no arrangement between Sarah and the bank for an automatic debit of Sarah's account. b. Yes, because the checks issued by Sarah bounced c. Yes, because a savings account is actually a loan so there may be legal compensation d. No, because the compensation must only be up to 300,000, 38. D owes C 10,000.00 with G as guarantor. C, on the other hand, owes D, P8,000.00. both debts are already due but D is insolvent In this case 2EO CPA REVIEW PHILIPPINES Effectiveness. Efficiency. C ywnw.seocpareview.ph ae . REAL EXCELLENCE ONLINE |9, 1 . Cam owes Gloria 500,000 with Jay as the guarantor. Cam executed ) BANGGANTS EXCE M.AZORES, B. BAKILAN, & E. EXCELLENCE Law on Obligation ! © collect from G P10,000.00. rds what the creditor 0 De may collect fom G 2,000.00 because 2 guarantor can set up compensation as regal the principal debtor. - ©. C may collect nothing from G because D is insolvent. 4. C may collect P8,000.00 from G. , ve to C 5 sacks D obliged himself to give 5 grams of “marijuana” Ok later, the parties agreed that D would instead gi ce Of rice. Which of the following statements is correct acks of ric @. The novation is void because the original obligation is void. Hence, C cannot demand the delivery of 5 s from D. ice from b. The novation is valid because the new obligation is valid. Hence, C can demand the delivery of 5 sacks of ri D. of 5 ©. The original obligation although void is validated by the new obligation. Hence, C can demand the delivery ‘sacks of rice from D. d. The new obligation is only voidable because had not yet performed the original obligation at the time heh ea Accordingly, the new obligation is binding and C may demand the delivery of 5 sacks of rice from D until obligation is annulled by a proper action in court. i D obliged himself to give to C a cow on December 10, 2020. On December 8, 2020, C demanded the delivery of the ‘cow but D did not comply. The following day, the cow died of an unknown disease. a. The obligation of D is extinguished because the loss is due to fortuitous event and D was not in default. b. The obligation of D is not extinguished because D can deliver another cow. ¢. The obligation of D is not extinguished because D was in default. d. The obligation of D is not extinguished because the demand was not made on due date. Dina bought a car from Jai and delivered a check in Payment of the same. Has Dina paid the obligation? Why? 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, Ted borrowed from Robin P500,000.00 the obligation is secured by a chattel Mortgage on Ted's Ferrari car. Subsequently, Ted paid Robin 200,000.00. Unknown to Ted, Tracy, who has a big crush on Ted, paid Robin 500,000.00 believing in good faith that Ted still owed Robin such amount. a. Tracy can recover P500,000.00 from Ted. If Ted cannot pay, Tracy can foreclose the ‘mortgage on D's Ferrari car. b. Tracy can recover nothing from Ted because he paid Robin withoi ¢. Tracy can recover P300,000.00 from Ted. If Ted cant 4. Tracy can recover P300;000.00 from Ted. If Ted. cannot pay, Tracy cannot foreclose the mortgage on Ted's Ferrari car, f 3 negotiable promissory note in favor of Glor: Gloria indorsed the promissory note to Phil, then Phil indorsed the promissory note to J ic fina statements is the most accurate? , Ty naesto day. Wich ofthe folowing 8. The obligation is extinguished because of mergericontusion, ». Cam must pay Jay 500,000 Cam must stil pay Gloria 500,000 and ask for reimbursement from Jay. d._ Jay must pay Gloria 500,000. ‘A owes B P10,000. A proposed to B that C will pay A's debt and that A agreed to the proposal. Later, when B tries to collect from time of delegacion, C was already Is A stil able? a. Yes, because there is delegacion. b. No, because there is delegacion will be released from all fabiities, C, he finds out that C is insolvent. It was proved ‘hate c 'nsolvent but this was not known to A, neither was the insolvency of public. knowledge, IEW PHILIPPINES" ies Effectiveness. Efficiency. Convenien 7 : et REAL EXCELLENCE ONLINE CPA REViEy © || 0919 093 8620 © ‘Support@reocpareview.ph_MAY 2023 CPA REVIEW SEASONPage 7 of7 | RFBT Physical Handout 01 REAL : EXCELLENCE Cees ee 4c Yes, because the inlalive care from A * d. No, because the insolvency was neither of public knowledge nor known to A at the time he delegated his debt. 48. A.owes B P 20,000 which became due on December 20,2021. On the date, A offered P 10,000, the only money he then had, but F refused to accept the payment. Thereafter A met, C, B's 23 year old daughter, to whom she gave the 10,000 with the request that she turn the money over to her mother. The money was stolen while in C’s possession, How much may B still recover from A? a. P20, 000 b. P10, 000 c. P15, 000 4. PO 46. There being no express stipulation and if the undertaking is to deliver a determinate thing, the payment shall be made a. “Atdomicile of the debtor b. Atdomicile of the creditor ¢. Wherever the thing might be at the moment the obligation was constituted 4. Wherever the thing ‘might be at the moment the obligation is to be fulfilled 47. Whatis the first rule in application of payment? a. - Debtor has the right to apply b. Creditor has the right to apply cc. Apply to the most onerous. 4. Apply in accordance with the agreement 48. A, B and C are liable jointly and proportionately to D and E in the amount of P60,000. E assigned back the obligation to A. How much obligation is extinguished by confusion or merger? a. P20,000 b. P30,000 cc. P 10,000 d. P60,000 49. While on the way to deliver an 18K diamond ring to B and P100,000 in payment of his debt to B, A (debtor) was robbed. What is the effect ofthis to his obligation? a. Extinglished as to P100,000 but not as to ring b. Extinguished as to ring but not to as P'100,000 c. Both obligations are not extinguished because generic thing never perishes ._ The obligations to the ring and 100,000 are both extinguished 50. What is the prescriptive period of the right to file an action based on quasi-delict, quasi-contract, oral contract and written ‘contract? a. 4 years, 6 years, 6 years, 10 years b. 4 years, 5 years, 6 years, 8 years c. 1 year, 4 years, 6 years, 10 years : d. 4 years, 4 years, 6 years, 10 years —nothing follows-—Page 1 of 7 | RFT Physical Handout 02 : EXCELLENCE e MAZORES, Hanae Rutan ee ae M.AZORES, B. BAKILAN, & E. BANGGAWAN General Provisions a. Definition b. Classification ¢. Stages of contract d. Freedom to contract (establish stipulations) and limitation Persons bound Essential requisites a. Consent +» Requisites +. Capacitated persons * _ Vices of consent b. Objects of contracts ¢. Cause of considerations of contracts Forms of contracts Reformation of instruments/contracts Interpretation of contracts Defective contracts Rescissible Voidable Unenforceable Void and inexistent pogp Drill Problems: b. Annulment ¢. Reformation d. Addendum On January 5, 2021, Liz sold a parcel of land to Rose. On Januai to Rona. Who has a better right to the land if the first sale i: knowledge of the latter? a. Rose b. Rona © Liz d. Both Rose and Liz Which of the following statements is incorrect? a. If the terms of a contract are clear and leave no doubt upon the Intention of the contracting parties the literal meaning of its stipulations shall control. " If some stipulation of any contract should admit of several meanings, it shall be understood that Import which is most adequate to render It effectusr Cod as bearing ©. The interpretation of obscure words or Stipulations in a contract shall be in favor of the obscurity. »f the party who caused ry 10,2021, Liz sold the same parcel of land 's registered ahead of the second sale, with 3. b.7 10. REAL M.AZORES, B. BAKILAN, & E. BANGGAWA EXCELLENCE iawon te i most in keeping wit d. Words which may have different significations shall be understood in that which is the nature and object of the contract. amb Jaime borrowed from Antonio P1,000,000 payable on or belt aan the debt was fully paid, Jaime died. He left his only son and het, “uo December 5, 2023, Antonio asked Julio for the full payment of ‘ 8. Jullo fs lable to Antonia for 500,000. | b. Julio is liable to Antionio for 1,000,000. his father. . Julio is not liable at all because he should not be made to shoulder the obligation of d. Julio is liable to Antonio for 250,000. ity given to 8, A appointed B as his agent to sell his condominium for 2,000,000 cash. Paar Se Paree ‘” cocaptanes B offered to sell to Cat the price of 2,000,000 on June 22,2021. On June 25,2021, sent B 2 letter of accepiaics of the offer which was received by B on June 30,2021. On July 15, 2021, B informe the offer. When was the contract perfected? a. On June 25, 2021, when B sent his letter of acceptance. b. On June 30, 2021, when B received the letter of acceptance. fe ¢. On July 15, 2021, when B informed A, the owner of the condominium of that C has accepted the offer. d. The contract was perfected on June 22, 2021, since the acceptance by C retroacts to the date of the offer. Which of the following does not constitute fraud? a. When through the insidious words or machinations of one of the contracting- parties, the other is induced to enter into a contract which, without them, he would not have agreed to. When there is an expression of an opinion by an expert which turned out to be wrong, and the other party relied upon such expert knowledge, When the misrepresentation refers to the usual exaggerations in. trade, and the other party had an opportunity to know the facts. d. When there is a failure to disclose facts, bound by confidential relations. Drake and Joey entered into a contract of sale where they made it appear that the selling price is 5,000,000 instead of the actual selling price of 10,000,000, in order to save taxes. Which of the following statements is true? a. The parties are bound by the contract of sale but onl stated in the contract. b. The parties are bound by the contract of sale for the actual consideration of 10,000,000. c. The parties are not bound at all. d. ‘The parties are bound by a contract of donation for the 5,000,000 difference. Don Mariano, a billionaire, told his only son, Rico, that he will leave him all his properties when he dies. Relying on Don Mariano’s promise, Rico sold Yzof his future inheritance to Gio for 500,000,000 pesos only. Gio agreed. The contract between Rico and Gio is: a. Rescissible b. Voldable c. Void d. Unenforceable § sold his only car for P100,000.00 to B. Unknown to S, B bought the car from him so that he could use the same in a bank robbery. What is the status of the sale of the car by S to B? a. The sale Is void because the motive of B is. illegal. bs The sales (ald Because the legality ofthe motive ofthe parties to the contract does not have any effect c. The sale Is voidable becau: er 5, 2023. On June 15, 2022, befor properties worth 500,000 pesos. O b. c when there is a duty to reveal them, as when the parties are ly for the 5,000,000 selling price since it is what's ise of the failure of B to disclose his motive to S. e damaged by the illegal motive of 8. the contract of sale stated that the area of ‘What remedy is available to either party? 4. _ The sale is rescissible at the instance of S because he would be S sold to 8 his 1,500 square-meter lot. Because of a typo error, the lot Is 2,500 square meters. Later, a. Annulment * b. Rescission S discovered the mistake.| EXCELLENCE | MAZORES, sah See rn QUIOT / c. Reformation d. Declaration of nullity of contract 11. The following must appear in a public document, except: a. Power.to administer a property b. Sale of a car worth 1,500,000 cc. Renunciation of hereditary rights d. Deed of real estate mortgage 12. 0 executed a contract of lease with T for his apartment for 1 year. T died 5 months before the expiration of the lease. S, the heir of T, continued to stay in the apartment but O wants to evict him. Can O evict S? a. No, because the rights to the contract of lease were transmitted to S upon the death of T. b. Yes, because the lease is terminated upon the death of T. c. Yes, because the contract of lease involves a property right which Is personal in nature. d, No, because he needs to send a notice to vacate first. 13. The principle that states that the contract must bind both contracting parties and its validity or compliance cannot be left to the will of one of them. a. Relativity of contract b. Freedom to contract ¢. Mutuality of contract d. Relativity of contract 4. There shall be no reformation in the following cases, except: a. Simple donations inter vivos wherein no condition is imposed; b. Wills c. When the real agreement is unenforceable d. None of the above 5. A lost in gambling and as payment executed a promissory note in favor of winner, 8. Later, B assigned the note to C. May C successfully recover from A? a. Yes, if C is not aware that it is in payment of a gambling debt. b. No, because B cannot recover and also the assignee. c. Yes, because B can recover, so also the assignee can. d. No, because promissory notes can only be negotiated but not assigned. 6. What Is an example of a natural element of a contract? a. Form b. Warranty against eviction c. Consent d. Consideration 7. Under this theory, a contract is perfected from the moment the acceptance is declared or made. a. Manifestation Theory b. Expedition Theory c, Reception Theory d. Cognition Theory 8. On March 5, 2021, A wrote a letter to B offering him lease of a building. On March 6, 2021, at 1:00PM, B sent a letter of acceptance which was received by A at 4:00PM that day. But at 2:00PM, A had already sent B a letter of withdrawal of the offer which was received by B at 5:00PM. When was the contract perfected? a. At 1:00PM b. At 4:00PM c. At 2:00PM d. The contract has not been perfected. Is there any exception to the rule that a mistake of law cannot vitiate consent rendering th i a, Mutual error as to the legal effect of an agreement when the real purpose of the patties is rustrated, my vitiate consent vv may b. Mistake as to the object of contract ¢. Mistake as to person (error in person)SS 2 20. What distinguishes earnest money from option money’ page 4 of 7 | RFBT oe \KILAN, & E. BANGGAWAN g REAL . M.AZORES, B. BAI Law on contract EXCELLENCE ONLINE d. There is no exception ly, mance on! jon for specific perfor ions t money, in case of non-payment, there can be an eon eee tied by the inju * iif there s option money, an action for speetic performance oF - party : eis sold, while if ther b. there is eamest money, title passes to the buyer upon delivery a ae eg} Fe money, ownership is reserved tothe seller and is not to pass until full payment c. The earnest money Is a distinct consideration for an option contract; ‘he aac is : if there is option money, 4. If there is earnest money, the would-be buyer is not required to buy; while if buyer is not bound to pay the balance . tion money is part of the 21. It refers to an unaccepted unilateral promise to buy or sell ‘a. Negotiation b. Preparation c. Policitacion d. Generation 22. A, an insane person, sold his specific laptop to B at a price of P10,000. After obtaining knowledge of the 23. What is the les 24. What Is the legal remedy available to the injured party 6. Ned, 15 years old, sold to Peter, 16 years old, 7. Mary sold to Jane a contract, C, a childhood friend of A, filed an action before the court for annulment of the contract of sale. What principle of contract is violated by the filing of such action? a, Mutuality of contract b. Relativity of contract ¢. Liberality of contract d.. Legality of contract gal remedy available to the injured party in case one of the contracting parties committed causal fraud? a. Action for damages for breach of contract b. Action for annulment of contract . Action for rescission of contract . Action for declaration of nullity of void contract 'y in case of absolutely simulated contract? @. Action for damages for breach of contract b. Action for reformation of instrument . Action for rescission of contract d. “Action for declaration of nullity of contract ¢. Voidable d._Unenforceable contract? a. Void b. Voldable Valid 4. Unenforceable an IPhone 13 Pro Max for 75,000. What is the status of the Parcel of land locate 9f P1,000,000 upon the perfection af new an Batangas City for 5,000,000 verbally. Jane paid a doy ae * the contract. "What isthe status of the covtraers mm payeient b. Rescissible ©. Valid Effectiveness. Effi iciency, C REAL EXCELLENCE ONLINE coy momence7e@ EXCELLENCE specs asemeaee d. Unenforceable 28. Jenny sold her car to Toni in order to evade her attachment by her creditors. The contract of sale between Jenny and Toni is: a. Void b. Rescissible c. Valid d. Voidable 29, Which of the following is not an unenforceable contract? @. An oral contract of sale of phone between a minor and an insane person. The phone has been delivered and the price has been paid, b. An oral contract of lease of a condominium between R and E for six months. c. Awritten contract of a sale of a specific car between S and B. The car actually belonged to O and was sold by S in the name of O without the latter's authority. d. An oral contract of guaranty 30.5, 17 years old sold his airpods pro to B, 30, for 24,000. The price is payable in 24 monthly installments. When S reached 18, he continued collecting the remaining 12 installments until the price was patd in full. Which of the following statements is true? a. S may still annul the contract. b. Only B may annul the contract with S on the ground of incapacity of S. €.S may no longer annul his contract with B. d. Sand B may annul the contract since it is voidable due to S's incapacity. 31. S convinced B to buy a diamond ring which S said was actually real diamond. B bought the thing believing that it was really diamond, but actually it was made of the bottom of a glass. The contract between S and B is: a. Valid, but S is liable for damages. b. Voidable c. Rescissible d. Void 32. Jeric, after consuming 12 bottles of Smirnoff Mule, became so drunk. On his way home, he met Diony, his old friend. During their short conversation, Jeric offered for sale his Timex watch to Diony for 25,000. Diony accepted the offer. What Is the status of the sale? a. Valid b. Unenforceable cc. Voidable d.. Rescissible 33. When both parties to a contract committed fraud of a serious nature, the contract is: a. Voidable b. Valid c. Void d. Unenforceable 34. C, a loan shark, threatened to sue B if he does not pay his debt to him. B, afraid of a court action, transferred his car to C, as payment of his loan. The dacion en pago is: a. Valid b. Voidable cc. Unenforcable d. Void 35. Which of the following contracts is rescissible? a. Sale of liver by a minor to buy an Iphone 12 promax b. Contracts entered into hypnotic spell c. Contracts entered into to defraud creditors when the latter cannot collect the claims due them EVIEW PHILIPPINES Effectiveness. Efficiency. Convenience ph a? %; We oy REAL EXCELLENCE ONLINE CPA REVIEW 0919093 8620 @ stippot@reocpareview.ph MAY 2023 CPA REVIEW SEASON iSite. illREAL © MAZORES, B, BAKILAN, & E. BAI EXCELLENCE iawon cont d. Contracts where both parties are incapable of giving consent 36. The Statute of Frauds applies only to: 2. Wholly executory contracts b. Contracts wholly or partially executed on the part of the debtor ¢. Contracts wholly or partially executed on the part of the creditor d. Wholly executed contracts 37. Which of the following is an unenforceable contract? a, Lease of a condominium for 8 months b. Lease of'a car at 10,000 per month for 5 years ¢. An agreement made in consideration of marriage d. Mutual promise to marry 38. Which of the following is not a voidable contract? a. Contract between a minor and an insane b. Where consent was givén by a party while in a state of drunkenness ¢. Where consent was given by a party while under hypnotic spell d. Where a party was mistaken as to the substance of the thing object of the contract 39. The following are rescissible contracts, exce| a. Those undertaken in fraud of creditors i b. Those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authorit ¢, Payments made in a state of insolvency for obligations to whose fulfillment the debtor could not be compelled at the time they were effected d. Contracts entered into by guardians in favor of their wards 40. Rudy entered into a contract of lease with Jinping for the West Philip is the status of the contract? a. Void b. Rescissible c. Valid d. Unenforceable 41. G was appointed as guardian of M, the latter being 17 years old. Later, without authority from G, M sold G's watch in writing to B valued at P100, 000 for P60, 000. Suffering lesion by more than % of the value, the contract is a. Rescissible b. Voidable ¢. Unenforceable d. Void 42. Ais indebted to B for P100,000. For the purpose of defrauding B, a sold his only parcel of land to X valued at P100,000. X has no knowledge of the intention of A. As a result a. The contract between A and X is binding. b. The contract is voidable because A acted in bad faith. . The contract between A and X is rescissible. d. The right of B is to rescind the contract because it was intended to defraud him. 43. $ orally sold to B his house and lot for P5,000,000 where B initially paid P50,000. After paying the balance B Tow 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. ¢. The oral sale of the house and lot although unenforceable under the Statute of Fraud has be the receipt of the consideration and, therefore, B can compel S to execute the deed of s: document. d. If S does not want to execute the public document, he can rescind or cancel his agreement with B, 1e Sea for a period of six years. What een ratified by ale in a public2% 3 REAL M.AZORES, B. BAKILAN, & E. BANGGAWAN EXCELLENCE . Law on Contract: ‘44, Sisa defrauded Booba in making the latter believe that the ring he Is selling is gold and diamond when in fact it is copper and glass. On the other hand, Booba defrauded Sisa in paying him P200,000 in fake Philippine currency. Which of these statements is correct? a. Sisa can go to court for the annulment of the contract so that the ring will be returned to him. b. Booba can go to court so that his fake money will be restored to him. ¢. Neither Sisa nor Booba can go to court since they are both guilty of fraud. 45. A is the guardian of B, a minor. B sold his land in writing to C valued at P1,000,000 for P650,000. The sale is a. Rescissible b. Voidable cc. Unenforceable d. Void 46. Which of the following can be considered as a feature of a void contract? a. subject to ratification b. itexists ¢. action or defense of nullity is subject to prescription d. novation cannot apply 47.B company bought out a competitor, C Corporation, with a stipulation that C Corporation should not thereafter engage in any business in the Philippines unless consented to and approved by 8 Company. a. The stipulation is defective subject to ratification. b. The stipulation is valid because the parties are free to enter into any stipulation, terms and conditions such as this one ¢. The stipulation is unenforceable as there was no showing that the sale was done in writing. d. The stipulation is void because it is contrary to public policy. 48. Example no 1: S sold to 8 in a private instrument his land. Later, 8 wanted to have the sale registered but registration requires a public instrument. In here, B may compel S to execute the needed public instrument. Example no. 2: S sold to B orally his land. After B paid, he wants to register the land in his name but he needed a public instrument of sale. In here, B may compel S to execute the needed public instrument. a, Both examples are false. c. Only the second is true. b. Only the first is true. d. Both examples are true. 49. A and B married but legally separated entered into a contract of sale involving A’s condominium unit for a price of P4,000,000. The sale was embodied in a public instrument and lady paid the price using her exclusive money. What is the status of the contract? a. Valid b. Voidable c. Void d. Unenforceable 50. M, a minor owns a specific ring valued at P100,000. G, the guardian of M, by means of fraud induced B, a minor to buy the ring for P70,000, which did so and G effected delivery to B. The contract is not in writing. Which is correct? a. The contract is unenforceable because M and B are both incapacitated to give consent. b. The contract is rescissible because M suffered a lesion of more than % of the value of the ring, The contract is voidable but G cannot ask for annulment of the contract. d. The contract Is voldable but B can only ask for annulment within 4 years from discovery of the fraud, ---nothing follows--- ) CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Conver seocpareview.ph REAL EXCELLENCE ONLINE CPA Revie? 74) 665 6774 @- 0919093 8620 @ support@reocpareviewph MAY 2023 CPA REVIEW SEASONPage 1 of § | RFBT Physical Handout 03 4 eA Law on Sales EXCELLENCE M.AZORES, B. BAKILAN, & E. BANGGAWAN, ONLINE _ LAW ON SALES MAZORES, B BAKILAN, & E. BANGGAWAN — Nature, forms and requisites Eamest money as distinguished from option money Rights/obligations of vendor and vendee Warranties 2. Express Warranties (in relation to consumer laws) b._ Implied Warranties 5. Installment sales, a. Personal property ~ Recto Law b. Real Property — Maceda Law ©. PD 957 / Condominium Act 5. Extinguishment of a contract of sale @. Conventional Redemption b. Legal Redemption Drill Problems: 1. A offered to give B his tapt contract did A and B enter ir a. Dacion en pago Bene OP valued at P50,000 in exchange of B's watch worth 30,000 and P10,000 Pesos. What into? b. Barter ©. Sales - d. Pledge 2. In.a.contractto sell, the non-payment ofthe price is: . Positive resolutory condition b. Negative resolutory condition ©. Positive suspensive condition 4. Negative suspensive condition ® Who among the following cannot enter into a contract of sale with each other? a. Husband and wite b. Husband and son ©. Wife and Father-in-law d._ Brothers and sisters ‘. This is the sale of an expected thing a. Future sale b.. Emptio rei speratae ©. Contract to sell d. Emptio spei Maneiah 1 Acrally sold to B his watch worth 400.00. A delivered to B the watch on Mar March 30. a, The contract is perfected on March 15, when th b. The contract is perfected on March 1, when the meeting of mind on the object and the pric & Ths Contact is perfected on March 30, when the price is pall anes Co Las their obligations in the contract. nse S Pol ice bah partes woul by then have performed Fre rece 8 e Perfected contract because the sale was made orally 3 sania are exceptions tothe rule that gross inadequacy of he price does ni a. If consent is vitiated 2 {the partes intended the contract to be some other contract Ifthe price is so low as to be “Shocking to the conseleren ‘ch 18. B paid for the watch on ‘ot affect the contract of sale, except:Page 2 of 5 | RFBT Physical Handout ¢ REAL EXCELLENCE BP Rone of the above |. Option money is part of the purchase price. |. Eamest money is proof of the perfection of the contract of sale a. Both statements are true. b ©. BANGGAWA M.AZORES, B. BAKILAN, & E- Law on Sale 7. Both statements are false. Only Statement |is true. Only statement Ils true rice 8. D sodd second-hand car to E for P160,000.00, The agreement between D and E was that half ofthe purchase price 9 F75.000.00 shal be paid in ve equal monthly instalments of P15,000.00 each. The car was delivered to E. and Paid the amount of P75,000.00 to D. Less than one month thereafter the car was stolen from E's garage on E's part and was never recovered. Is E legally bound to pay the said unpaid balance of P75,000.00 a. No, because the car was lost through fortuitous event. b. Yes, because the car was already delivered to him and he became the owner thereof. ©. No, because there was no agreement that E is liable in case of loss. 4. Yes, because the car was lost in his garage 8. On Apri'20, 2021 Awra sold to Buknoy a parcel of registered land, The contract of sale between Awra and Buknoy wa notarized on the same date. On Apri 25, 2021, Awra sold the same land to Vice. Vice immediately registered the lanc without knowledge of the sale of the land to Buknoy. Who has a better right to the land? a. Buknoy, because he is the first buyer in good faith b. Vice, because he is the first registrant in good faith ©. Buknoy, because he is the first possessor in good faith d._ Vice, because he is the first possessor in good faith 10. Michelle offered to buy from Jayzam his house and lot located in Makati City for 4,500,000. Jayzam accepted the offer d Michelle drew a check in favor of Jayzam amounting to P500,000, which the latter thereafter deposited in his account. A month after, Michelle wrote to Jayzam asking for an extension for the payment of the balance due to the expected delay in the remittance of the needed amount by her financier from the US. Jayzam denied Michelle's reques because another buyer offered to buy the house and lot for P6,000,000. Jayzam cancelled his agreement with Michelle and offered to return the P500,000 down payment. Can Jayzam do so? a. Yes, because there is no perfected sale yet b. Yes, because Michelle delayed in payment. ©. No, because there was a payment of the earnest money hence the contract is perfected 4d. No, because Michelle is not yet in delay in payment 11. A, guardian of B, sold B's house and lot worth 480,000 for P240,000 a. The contract can be rescinded because of inadequacy of price », The contract cannot be rescinded because there is no fraud, mistake or undue influence ©. The contract cannot be rescinded because all the elements ofthe contract are present 4._The contract can be rescinded by A. 12, Sand 8 entered into a contract whereby S transfered 10 8 a specifi car forthe price of P200,000.00, while B 000.00, gave to $,790.000.00 cash and a diamond ring worth P10, 000.00. The heading of the writen contre reads, “Contract of a, The contract is void because the intention of the parties is void since the value of monetary consideration given. S ofthe diamond rin b. The contracts a valid contract of sale as intended by the parties regardless of is more or less than the value of the property consist % whether the monetary consideration ©. The contract is a valid contract of barter since the value of the propery i The intention of the parties is immaterial. Property is more than the mi 4. The contract is partly a contract of barter and partly a contract of sale 13, A°sold to B her GUAPO guitar. [twas agreed that A would fix the price a week later At price P10, 000. B agreed. Was the sale perfected? the a a. No, because the price was left to the discretion of one of b. No, because at the time of sale, the price was not fixed G._ Yes, because the price fixed by one ofthe parties was accepted by the other d: Yes, because there was agreement that A would fix the Price, . 9 iS more than the 'onetary consideration Teed time, A named the the contracting parties, REO CPA REVIEW PHILIPPINES Effectiven www reocpareview.ph REAL EXCELLENGE Grol cy. Conye Ee enienc, © (074) 6856774 @ 0919093 8620 © suppongreocparoview.ph MAY 2028 CPA Brvnc: ONLINE CPA REVIEW ©Page 3 f 5 | RFBT Physical Handout 03 EXCE MAZORES, B. BAKILAN, & E- paoale f EXCELLENCE ether il 30, 2021 to decide w! 14. Victoria offered to sell to Ana her Luis Baton bag for P50,000. Victoria gave ana ‘on on ‘april 28, 2021, Victoria found she will buy the bag_ Ana agreed to the option and have Victoria P00 option money. AEE to personally info another buyer willing to pay P60,000 for the bag. On the same day, Victoria her that she is withdrawing the offer. jive P50,000 when another buy offers Victoria may validly withdraw the offer because it's unfair if she will only rece! . to buy the bag for a higher amount. b. If Ana insists on buying the bag, she must pay P60,000 Victoria cannot withdraw the offer because of the option money Victoria cannot withdraw the offer and Ana is only liable to pay P49,500. 18. Ted bought from Bamey’s shop 5 pieces of flower pots through Shopee, for surprised to find out that the package contains 10 pieces of flower pots. Which of a. Ted may accept only § flower pots and reject the other 5. b Ted may accept the 10 flower pots, but he is only liable to pay P500. Ted may reject the entire package 4 Both Band 16. A purchased from Century Properties a 1-hectare lot for P10,000,000 on which he intended to construct 3 in building. The contract provided for 100 equal monthly installments of P100,000. After having paid 60 installments, defaulted in the payment. B now wants to claim the return of the cash surrender value. How much can A recover? a. Aisentitled to 50% cash surrender value or P3,000,000. b. Ais entitled to 55% cash surrender value or P3,300,000. Ais entitled to 90% cash surrender value or P5.400,000 A cannot invoke the Maceda Law for the return of any of the payments he had made for the lot he purchased 17. B visited a store selling lamps, light bulbs and similar items. He informed the seller that he was buying 2 units of @ 50- watt “Phillips” bulb. Though he intended to use the 2 bulbs for the headlight of his car, he did not inform the seller of his Purpose. Thereafter, he installed the 2 units of ‘Philips" bulb on his car but they did not function. Based on the foregoing, which of the following statements is incorrect? a. The selleris liable for breach of warranty of fitness for a particular purpose. . The seller is not liable for breach of warranty of fitness for a particular purpose because the buyer did not rely on the seller's skill or judgment ©The seller's not lable fo B since the sellers warranty is only for merchantability, or thatthe bulb is ft for the general purpose for which it was intended d. There is no warranty of fitness for a particular purpose since the bulb was sold to B under its trade name 18. Mark bought two goats, one male and one female, from, Siena. He paid P§,000.00and P7,000.00, respectively, for the goats which he intended to use for breeding, Later, the female got was found unfit for breeding because of s redhibitory defect. @ B can rescind the sale of the female carabao only because he paid a separate price for it >. B can rescind the sale of both animals because he would not have bought the male carabao without the female © Bcannot rescind the sale of either animal under the “Iet the buyer beware” rule. d__B can rescind the sale of both animals only if he had paid a single price for both them, 18. In case of eviction, the vendor shall be liable to the vendee only for the value of the thing s ae ee ly ing Sold at the time of eviction in a When there is waiver intencionada b. When there is waiver consciente. & When the vendor was in bad faith and there was no stipulation exempting the vendor il so Spt ray wn tn ae seg eto ny cae eon ¥e buyer is obliged to pay interest on the price from the time of deli meee yet obiged to pay inte elon Beg {he time of delivery of the thing sold up to the time of payment i Should it have been stipulated b. Should the thing produce fruits or income © Should the vendee be in default in the payment of the price 4d. Should the vendee be insolvent 21. S sold to B his dog which he knew was afflicted with a disease. TI hidden defect. After delivery, the dog was stuck by ightnng and thesis oreee tat there is no warranty against Ted was 100 each. Upon delivery, ¥ the following statements is incorrect? REO GPA REVIEW PHILIPPINES Effectiveness. Effici “ jency. www-reocpareview.ph REAL EXCELLENCE ONLINE connenience rence "A REVIEW @ (074) 6656774 @ 0919093 8620 © suppona meview.ph MAY 2023 CPA REVIEW SEASONREA page 4 of 5 | RFBT Physical Handout 03 L f M.AZORES, B. BAI &E. BANGGAWAN AZORES, B. BAKILAN, m EXCELLENCE nt is not lable to pay B any amount because the dog was lost due to fortuitous eve! ° d upon between B and hi imsellf, b._ Sis not lable becauise of the waiver agree’ 7 Sislabe to eum the price pat by B because the waver s vod. is liable for the price less the value of the dog at the . 22. Sine redhibtory action based on the faults or defects of animals must be brought within 1. 30 days from delivery to the vendee 40 days from delivery to the vendee 6. 4 days rom devery tothe vendee 6 months from delivery to the vendee ” 23, A.B and are co-owners of an undivided parcel of land. A sold his 1/3 interest to B absolutely. Which is correct a" C may exercise his right to redemption on the interest sold by A to B ner b. C cannot exercise the right of redemption because the sale was made in favor of a co-owne c. The sale made by A to B is void because it was not made in favor of a stranger 4. C:may redeem only % of the interest sold by A to B - 24. B purchased from $a laptop computer worth 100,000 00. The terms of the sale provide for a down payment or 20,000 00 wth the balance payable in 8 equal monthiy instalments, To secure the balance, S required 8 to execute ‘a chattel mortgage on the laptop computer and a real mortgage on 8's lot. B complied with all the requirements bu defaulted in the payment of the third and fourth installments. These remedies are available to S except one. Which is it? a Cancel the sale b. Exact fulfilment of the obligation, ©. Foreciose the real mortgage and thereatter recover any deficiency from B 4. Foreciose the chattel mortgage and thereafter the real mortgage in case of deficiency. 25. A sold her specific car to B for P200,000 payable in 5 equal insialiments. A delivered the car to B but a mortgage was consttuted on the car to answer for the unpaid installments. B paid the fist 2 installments but failed to pay the last 3 installments. A foreciosed the mortgaged property and sold it at public auction for P100,000. Which is correct? a. Acan recover from B the balance of P20,000 even if there is no stipulation to that effect. b. Accn recover from B the balance of P20,000 if there is stipulation to that effect. ©. Acannot recover the deficiency except if there is stipulation to that effect 4. Acannot recover the deficiency even if there is stipulation to the contrary 26. Developers of condominiums are required to secure permit from a. Land Registration Authority b. Home Development and Mutual Fund ©. Housing and Land Use Regulatory Board 4. Registry of Deeds 27. Adam who is in New Zealand called his fiend inthe Philippines, Camilla to ask the latter to sell his land P : 7 in Subic, Fampanga. ashe is need of cash. Accordingly, Camila Sold the land to Ria. The deed of sale was ina pubic netanee nt a. Voidable b. Unenferceable ©. Void @. Valid 28. Aand B are co-owners of a rural lot not exceeding 1 North, by the road; on the East, by the lot of X coat ore near fon the Saat ae ou ides 8 follows: on the hectares; and on the West, by Z's lot consisting of 2% hectares. A sells his undivided or oy conssting of 2 72 who Taman Several hectares ofruraardin the area, Who haste ight of eg 29, It refers to the right which the vendor reserves to himself to re and useful expenses made on the thing sold. Sr eatimae payments made therefor and the necessary REO CPA REVIEW PHILIPPINES i v Effectiveness, www.reacpareview-ph REAL EXCELLENCE On Ry: Gonvenience’ ONLINE CPA REVIEW © (074) 6656774 @ 0019003 9620 © suppoterreoeparevew.ph MAY 2023 CPA Review; P Page 5 of § | RFBT Physical Handout 03 REAL M.AZORES, B. BAKILAN, & E. BANGGAWAN & EXCELLENCE law on sles BR ientional redemption. b. Legal redemption. ¢. Equity of redemption. d._ Right of pre-emption : 30. A and B are co-owners of a lot. On April 20, 2021, A sold to C his share on the lot. On May 10, 2021, A informed B in ‘writing about the sale. On May 31, 2021, the sale was registered. On what date shall B's legal redemption period start? a, April 20, 2021 b. May 10,2021 cc. May 31, 2021 d. B do not have the right of legal redemption nothing follows-— CPA REVIEW PHILIPPINES Effectiveness. Efficiency. Convenience Bee REAL EXCELLENCE ONLINE CPA REVIEW © (074) 665.6774 @ 09190938620 © support@reocpareview.ph_ MAY 2023 CPA REVIEW SEASONPage 1 of 3 | RFBT Physical Handout 04 EXCELLENCE azonet SSI SS LAW ON CONSUMER PROTECTION ACT M.AZORES, B. BAKILAN, & E. BANGGAWAN ‘Consumer Product Quality and Safety Deceptive Sales Acts and Practices Product Service and Warranty Labelling and Packaging Consumer Rights a. Price Tag Act b. Lemon Law Drill Problems: 1. Under the Consumer Protection Act, express warranties become operative from: a. The delivery of the goods b. The moment of sale Date stipulated in the contract d. The time the buyer claims them 2. Statement |, In case of the failure of both the manufacturer and distributor to honor the warranty, the retailer shall be secondarily liable ‘Statement Il, The retailer cannot claim for reimbursement from the manufacturer and distributor in case he honors for the warranty a. Both statements are true b. Both statements are false ©. Only Statement |is true d. Only Statement Il is true 3. The following are the basic objectives of RA No. 7394 or the Consumer Act of the Philippines, except a. Protection against hazards to health and safety . b. Protection against deceptive, unfair and unconscionable salés acts and practices Promote full protection to the rights of consumers in the sale of motor vehicles against business and trade practices which are deceptive, unfair or otherwise inimical to consumers and the public interest 4._ Involvement of consumer representatives in the formulation of social and economic policies 4. Itmeans consumer sales or leases which are personally solicited by any person or organization by telephone, person- to-person contact or by written or printed communication other than general advertising or consummated at the buyer's residence or a place of business, at the sellers transient quarters, or away from a seller's regular place of business a. Online selling b. Home solicitation sale ©. Face to face advertisement d._Home-based selling 5. The provisions of RA No. 7394 or the Consumer Act of the Philippines and its Im shall be enforced by the following government agencies, except ementing Rules and Regulations a. DOST b. DOH c DA 4. OT 8 Afood sha be deemed tobe: adulterated inthe folowing instances, except Blt thas passed ts expiy ders 2 MMNY: PUG or decomposed substance, ori tis othenvse unfit for food, . Ifithas no label and nuttitional facts. 7 Stim whole or par, the product ofa at iseased animal or of an animal whic A food additive, with respect to any particular use or intended use, shall be deer Patan jer than by sl med unsafe unless aetna REO CPA REVIEW PHILIPPINES ; 5 ae ei : Puerta Cason) EN tela tau So enor eee Lande Kei Nat UTS ean10 1 Page 2 of 3| RFBT Physical Handout 04 REAL M.AZORES, B. BAKILAN, & E. BANGGAWAN ‘ ‘aw on Consumer Protection Act eae, EXCELLENCE Li 2 for investigational a, Itand its use or intended use conforms to the terms of an exemption for being solely intended ig use by qualified experts. ar b. Ithas been prepared, packed or held under unsanitary exon whereby it may have become contaminate filth, or whereby, it may have been rendered injurious to health. | ae © Its container is composed, in whole or in part, of any poisonous or deleterious substance which may r contents injurious to health, d._Itbears or contains any added poisonous or deleterious substance. cosmetic shall be deemed to be adulterated in the following instances, except a. fit consists in whole or in part of any filthy, putrid, or decomposed substance. b. lit has been prepared, packed or held under unsanitary conditions whereby it may have become contaminated with filth, ©. fit is not a hair dye, and it bears or contains color additive other than which is permissible. 5 ‘ 4. Mfits use or intended use conforms to the terms of an exemption for being solely intended for investigational use by qualified experts. The act or practice of a seller or supplier is deceptive in the following instances, except aA consumer product or service has thé sponsorship, approval, performance, characteristics, ingredients, accessories, uses, or benefits it does have b. Aconsumer product or service is of a particular standard, quality, grade, style, or model when in fact itis not. © Aconsumer product or service is available to the consumer for a reason that is different from the fact. d. A consumer product or service can be supplied in a quantity greater than the supplier intends. ; It refers to a vehicle constructed entirely from new parts and covered by a manufacturer's express warranty at the time of purchase that it has never been sold or registered with the LTO or an appropriate agency or authority ‘a. Brand new motor vehicle b. Second hand motor vehicle Reconditioned motor vehicle d._ Brand new 6 wheeler motor vehicle Before availing of any remedy under the Lemon Law the consumer shall Demand the repair of the vehicle in writing b. File a complaint before the DTI ©. File a case before a proper court 4. Notify in writing the manufacturer, distributor, authorized dealer or retailer of the unre: Consumer's intention to invoke his or her rights under the Lemon Law At any time within the Lemon Law rights period, and after at least manufacturer, distributor, authorized dealer or retailer for the same Complaint, unresolved, the consumer may invoke his or her rights under the Lemon Law a Two(2) * >. Three (3) ©. Four (4) . Five (5) | means sales devices whereby a person, upon condition that he mak of his representative a right to recruit for fecrult upon condition of making similar in a Chain distribution plans, b. Multi-level marketing © Recruit for commission solved complaint, and the ‘separate repair attempts by the same and the nonconformity issue remains fs an investment, is granted by the manufact prt one or more additional persons who will also be granted such right to Westments b. Torefund the purchase price of the product less a reasonable © To pay the consumer re: mined by tae ‘asonable damages as may be determined by the department 2EO CPA REVIEW PHILIPPINES, Efe yew reoopareview.ph tiveness, Efficien B (074) 6656774 @ 00190038620 © support@reocpareview ph icy. Com once REAL EXCELLENCE ONLINE GPA, RevieMe? MAY 2023 CPA REVIER ne =Page 3 of 3 | RFBT Physical Handout 04 REAL EXCELLENCE M.AZORES, B. BAKILAN, & E, BANGGAWAN ~~ Law on Consumer Protection Act d. To enter into compromise with the injured person. 15. A food shall be deemed to be adulterated in the following instances, except a. fit bears or contains any poisonous or deleterious substance which may render it injurious to health. b. Ifthe substance is not an added substance or if the quantity of such substance does not ordinarily render it injurious to health ¢. Ifitis, or bears or contains a color additive which is unsafe under existing regulations. 4. If it has not been prepared in accordance with current acceptable manufacturing practice established by the Department concerned through regulations, It means a consumer sale wherein the seller uses the announcement to create the impression that he is willing to give large discounts or merchandise in order to reduce, dispose or close out his inventory and business. a. Closing out sale b. Liquidation sale ©. Moving out sale d. Clearance sale This shall be the period during which the consumer can report any non-conformity to the standards and specifications of the manufacturer, authorized distributor, authorized dealer or retailer of any motor vehicle, and pursue any right as provided for under the law. Warranty rights period Lemon law rights period Guaranty period Dispute resolution period 16. 17. aece ~-Nothing follows-—- REO CPA REVIEW PHILIPPINES i Effectiveness. Effici . Efficie www.reocpareview.ph REAL EXCELLENCE ONLINE cen wemence © (074) 86 6774 @ 2100508620 suppen@reocpereviow ph MAY 2023.CPA REVIEW SEASONCann Dri 1 REO CPA REVIEW PHILIPPINES Pa usa al Ce icc OM ee ot eta eee Page 1 of 7 | RFBT Physical Handout 05 REAL te, EXCELLENCE Law on Partnership MAZORES, B. BAKILAN, & E. BANGGAWAN LAW ON PARTNERSHIP MAZORES, B. BAKILAN, & E. BANGGAWAN, Nature and as distinguished from corporation Kinds of partnerships Formalities required Rules of management Obligations of partners a. To the partnership and to the partners b. To third persons Rights of a partner ‘Sharing of profits and losses Dissolution and winding up Limited Partnership ll Problems: ‘Which of the following is not a characteristic of a contract of partnership? a. Onerous b. Preparatory c. Real Principal ‘The minimum capital in money or property except when immovable property or real rights thereto are contributed, that will require the contract of partnership to be in a public instrument and be registered with the Securities and Exchange ‘Commission (SEC) is: a. P5,000 b. P10,000 ¢. P3,000 d. P30,000 Based on the foregoing question, what will happen if the requirements are not complied with’ a. The partnership is void b. The partnership vatid but will not acquire juridical personality c. The partnership is valid and will acquire juridical personality 4, The partnership is not valid but acquires juridical personality Mf an immovable property is contributed to a partnership, the contract of partnership must: a. Be ina public instrument b. Signed by the parties ¢. Contain an inventory of the immovable contributed d._Allof the above A and B entered into a universal partnership of all present property. At the time of their agreement, A had a 10-hectare agricultural land, which he inherited from his father. B, on the other hand, owned a five-door apartment which he bought from C. During the 1* year of the partnership, A harvested crops on his agricultural land worth 500,000, while B received rentals from the partnership amounting to 400,000. On the same year, A's mother died and A inherited from her a fer Pond, The partners had a stipulation that future property shall belong to the partnership. Which of the following dese fot belong to the common fund of the partnership? a The agricultural land The crops worth 500,000 The fish pond Any income that will be received from the fish pond ULL lag ot rv REAL EXCELLENCE ONLINE CPA Ri NON re tayPage 2 of 7 | RFBT Physical Handout 0! REAL M.AZORES, B. BAKILAN, & E, BANGGAWAN ia EXCELLENCE Law on Partnership fit fe time of the execution of the articles of partnership, A had lt ce erence treed oh th ro years earlier. B, on the other hand, had a fleet of taxis, ‘a two-door apartment which he inherited from his father 3 y which he purchased 2 years before. In the first year of the partnership, B earned P500, 000.00 as a radio talent, while ‘Awon P1, 000,000 00 nthe lotto. During the same period, rentals of P120, 000.00 were collected from the apartment, while fare revenues of P200, 000.00 were realized from the operation of the fleet of taxis. Which of the following belongs to the partnership? a. Two-door apartment. b. Lotto winnings of P1,000,000.00. ©. Salary of P500,000.00. d._ Fleet of taxis, 7. Which of the following cannot enter into a universal partnership? a. Brothers and sisters, b. Aman and a woman living together as husband and wife without the benefit of marriage . Private person and public officer ._A Filipino and a foreign individual 8. Apartnership which has for its object determinate things, their use or fruits, or a specific undertaking, or the exercise of a profession or vocation. a. Universal partnership of present property b. Universal partnership of profits . Particular partnership d._ Limited partnership 9. When is a contract of partnership perfected? a. From the delivery of the contributions of the partners b. Upon the execution of the contract ©. From the meeting of the minds of the partners d. Upon the registration with SEC 10. A. B and C formed a partnership named ABC Company. In order to infuse more capital to their business, they decided to obtain 2 900,000 loan from XYZ Bank. However, since they have not yet established their credit, they asked D, a wellKnown businessman to help them negotiate a loan from the bank. D agreed and represented himself as a partner of ABC Company. What kind of partner is D? a. Silent partner b. Dormant partner c. Partner by estoppel d._ Managing partner 11 Refer to the previous question, assuming that ABC Company cannot pay the loan and at that time the assets of the Partnership is only 450,000. From whom can XYZ bank collect payment? a. From D, for 450,000 only b. From A, B, and C who are liable for 300,000 each S From ABC Company for 450,000, and the balance from the separate property of A, B, and C for 150,000 each © fom ABC Company for 450,000, and the balance from the separate property of A.B! and © for 112,500 each 12. A universal partnership is void, except a. An inventory is not made when an immovable property is contributed. b._Itthe purpose or object is against the law, morals, public order, public policy and custom © When made by persons who are prohibited in giving each other donation, d. When there is no agreement as to profits and losses. 13. The recent [DY & person ofa share of the profits of a business is prima facie evidence that he is 4 Partner in the business a. Apayment of a debt by installment or otherwise b. As wages or rent ©. Asan annuity to a widow or representative of deceased partner. d. As his interest in the partnership 414, Partnership as distinguished from corporation Acquires juridical personality upon approval by the SEC and issuance of certificate REO CPA REVIEW PHILIPPINES ON Biectveis . ie ss. Efficiency. Conveni www.reocpareview.ph REAL EXCELLENCE ONLINE CPA REVIEW @ (074) 6656774 @ 0919093 8620 © support@reocpareviewr nn a1REAL M.AZORES, B. BAKILAN, & E, BANGGAWA EXCELLENCE Law on Partnershi b. Has limited liability ©. Created by operation of law d._ No power of succession 15. Where at least one partner is a general partner and the rest are limited partners ‘a. General partnership c. Partnership de facto b. Partnership by estoppel d. Limited partnership 16. May contribute money, property or industry to the common fund: a. Limited partner . Both limited and general partners b. General partner d. Dormant partner 17. Which of the following statements true? Statement 1: A partnership like a corporation has a judicial personality separate and distinct from that of each of th partners, Statement 2: Sharing of gross returns by itself proves a partnership. a. Only the first statement is true b. Both statements are correct. ¢. Only the second statement is correct d._Both statements are incorrect, 18. Statement 1: In the absence of stipulation, the share of industrial partner in the profits shall be equal to the share of capitalist partner with the smallest share. Statement 2: The industrial partner shall not share in the losses unless stipulated a. First statement is false, second is true. b. First is true, second is false. c. Both are true d. Both are false. 19. Ais the capitalist partner and B is the industrial partner. A engaged personally in the same kind of business as that ot the partnership. a. If there are profits, A shall give them to the partnership, b. If there are losses, the parinership will bear the losses c. If there are profits, A shall share the profit with the partnership. d. A may be excluded from the partnership but without damages. 20. Suppose in the same facts as aforementioned, B engages in business on his own account but different from that of the partnership. a. If there are losses, B and the partnership shall equally share. b. If there are profit, B and the partnership shall share equally ©. Bmay be excluded from the partnership with damages. d._B may be excluded from the partnership but without damages. 21. A.amanaging partner, is B's creditor to the amount of P 1,000 already demandable. B also owes the partnership P1,000, also demandable. A collects P1,000 from B. One is not correct. ‘a. IfA gives receipt for the parinership itis the partnership's credit that has been collected b. If Agives a receipt for his own credit, itis A’s credit that has been collected. ©. IfAgives a receipt for his own credit, P500 will be given to him, P500 to the partnership. 4. _B may decide that he is paying only A's credit if the personal credit of A is more onerous to B. 22. A, B and C are partners. Their contributions are as follows: A, P60,000; B, P40,000 and C, services. The partners agreed to divide profits and losses in the following proportions: A, 35%; B, 25% and C 40%. If there is a loss of P10,/000 how should the said loss be shared by the partners? ‘ a. A, P6,000; B, P4,000; C, nothing b. A, P3,000; P2,000; C, P5,000 © A, P3,500; B, P3,500; C, P3,000 d. A, P3,500, B, P2,500. C, P.000 23. Using the preceding no., but the partners did not agree on how to divide profi how should the said loss be shared by the partners? Profits and losses. If there is a loss of P10,000, a. A, P6,000; B, 4,000; C, nothing A, P3,500; B, P3,500, b. A, P3,000; P2,000; C, P5,000 4. P3600, B,P2'500, C, Page REO CPA REVIEW PHILIPPINES © * Effectiveness. Efficie! vl ney. Conveni www.reocpareview.ph REAL EXCELLENCE ONLING CPAREVIEW © (074) 6856774 ® 0919093 8620 © support@reocpareview.ph MAY 2023 CPA REVIEW SEASONPage 4 of 7| RFBT Physical Handout 0! REAL ¥ M.AZORES, B. BAKILAN, & E. BANGGAWAN EXCELLENCE Law on Partnership 24, A and B are partners with A is the managing partner. C owes A P10,000 and the partnership P30,000 which are now both due. A issued a receipt for the payment of C in the amount of P10, 000 in his own name. The payment shall be applied to a. The partnership credit totally. b. The credit of A only since the receipt is in his name. c. The payment shall be applied equally to both credits d._ The payment shall be applied proportionately to both credits Aand B agreed on a profit-sharing ratio in their partnership. A, being industrial partner, and B, as capitalist partner. It was also stipulated that A shall also share in the same ratio as to the losses. Is A liable for losses? a. Yes, even the absence of stipulation. b. Yes, because it was so stipulated. c. No, because the law exempted the industrial partner from losses. ._No, because the partners cannot stipulate that the industrial partner shall be liable for losses 26. A.and B are partners of X Partnership. B is the managing partner. E owes A P10,000 and X Partnership P30,000. The obligations of E are Lwth due. A collected from E the debt of E to A in the amount of P10,000 and issued a receipt in the name of A. a. The whole of the P10 O00will be applied to debt of E to A. b. P10, 000 will be applied to debt of E to the partnership. c. P2,500 to debt to E to A and P7,500 to debt of E to the partnership. d. _P5,000 each to debt of E to A and the partnership. ‘A,B, and C are general partners in ABC partnership. G is debtor to the partnership in the amount of P15,000. A receive from the debtor G the sum of P5,000 and issued a receipt identifying the amount collected as P5,000 a. Acan be compelled to share B and C their P5, 000. b. Band C should automatically sue G to collect the P10,000. ¢. Band C can charge the capital of A with their share of the P5,000. d. A cannot be compelled to share the P§,000 with B and C. Statement 1: An agreement which excludes one or more partners from shares on the profits or losses is valid as long as itis voluntarily. Statement 2: The power of a managing partner granted after the partnership has been constituted may be revoked at 25. 2. 28. any time, Statement 3: None of the partners may make any important alteration in the immovable property of the partnership even if useful to the partnership without the consent of all partners. a. Allstatements are correct. b. Only statement 3 is correct. ¢. Only statement 2 is correct 4. Only statements 2 and 3 are correct. 29, X, ¥, and Z are partners who contributed equally to the capital of the partnership. A owes the partnership P9,000.00, Z collected from A P3,000.00 before X and Y could receive anything from A, who later became insolvent and therefore they could not collect their shares. " Partner Z shall share the P3,000.00 with his co-partners X and Y. Z cannot be required to share what he already received from A. X and Y should first exhaust all remedies to collect from A. Betta ca” automatically deduct from the capital contribution of Z inthe partnership their respective shares in the Three of the following are property rights of a partner. Which is not? a. Right to specific partnership property. b. Right to participate in the management. ¢, Right to demand formal accounting of partnership affairs, d._Interest of the partner in the partnership 31, The liability of the pariners, including industrial partners for Partnership contracts d it scout) when all partnership assets have been exhausted is if ean a Pros aoge Me and for its REO CPA REVIEW PHILIPPINES www.reocpareview.ph sr Effectiveness. Efficiency. Convenience REAL EXCELLENCE ONLINE CPA REVIEW. MAY 2023 CPA REVIEW SEASON © (074) 005.6774 © 0010093 8620 © sunpon@eocpareviow ph» Page 5 of 7 | RFBT Physical Handout 05 REAL M.AZORES, B. BAKILAN, & E. BANGGAWAN Xe EXCELLENCE iswonporterstip b. Joint c. Solidary & aunty 32. M, J, and G formed a general partnership with a capital of P100,000 and the partners contributing 60%, 30%, and 20%, respectively. O has a claim of P160,000 against the partnership. IfO files a suit to collect her claim, which of the following is not correct? All the partners are liable to the extent of their separate property ‘All the partners shall be liable pro-rata with all their property only after the partnership assets have been exhausted. The personal liability of the partners is merely joint and not solidary After exhaustion of the partnership assets, M, J and G'shall be liable 50%, 30%, and 20%, respectively, of the unpaid claim, 33. A,B, C, and D are general partners contributing P20,000, P30,000, P50,000 and industry, respectively. At the time of liquidation, the partnership is indebted to Y for P50,000, to partner A for P30,000, and to partner B for P20,000. If the assets of the partnership amounts only to P20,000, which of the following is correct? a. Y can collect P20,000 from the partnership and from partners A, B, and C at P10,000 each. b. After exhausting the assets of the partnership amounting to P20,000, Y can collect from partners A, B,C, and D at 7,500 each Y can collect P20,000 from the partnership and P30,000 from either partners A or B or C or D. IFY succeeds in collecting the P30,000 from the separate properties of the partners concerned, partners A, B, and C will be required to make additional contribution 34, D and E are partners of DE partnership by contributing PS0,000 each on June 1, 2020. On June 2, 2020, the partnership contracted an obligation to pay Z in the amount of P180,000. On July 15, 2020, F was admitted as a new partner, contributing P50,000. How will the obligation be paid? a. D~P60,000; E- 60,000, F ~ P60,000 b. D~P65,000; E ~ P65,000, F ~ P50,000 cc, D~P30,000; - P90,000; F - P90,000 d._D~P180,000; E ~ P180,000; F none 35. A, 8, and C formed a general partnership with the following contributions to the common fund. A-P20,000, 8-P40,000, C-P60,000. There was no agreement on the division of profits or apportionment of losses. After some years of business operations, the assets of the partnership dwindled to P30,000, so the partners agreed to stop their business. The partnership is indebted to Sansa for a loan of P120,000. Under the circumstances, how much can Sansa collect from the partnership? a. P30,000 b. P90,000 cc. P120,000 d._None 36. A, B, and C formed a general partnership with a capital of P100,000 and then partners contributing 50%, 30% and 20% respectively. D has a claim of P160,000 against the partnership, ID files asuitto collect her claim, which ofthe following isnot correct? a. Allthe partners are liable to the extent of their separate property. b. Allthe partners shall be liable pro-rata with all their property only afer the partnership assets have been exhausted c, The personal liability of the partners is merely joint and not separate solidary, 4 Ae exhaustion of the partnership assets, A, B, and C shall be liable 50%, 30% and 20% respectively to D tor 37. A.B. C, and D are partners in AB and Company, contributing P20,000, P30,000, P50,000 and in Due to financial reverses, they decided to dissolve the partnership. At the time of dissolution only Pro.aby islen butt obligation to Y ~ P50,000, to partner B ~ P30,000 and to partner C — P20,000 remain unpaid. Which of the follies correct if there is no profit and loss sharing agreement? ‘ollowing is a. The partnership, A, B, C, and D will pay Y P10,000 each. b. Y can collect P12,500 each from partners A, B, C, and D, ¢. Dis exempt from loss, hence only A, B, and C will bear the P80,000 loss in 4. Only partner A will make additional contribution because partner's B and C Proportion to their capital contribution, can claim legal compensation : REO CPA REVIEW PHILIPPINES neaeanen Effectiveness. Efficiency. Convenience REAL EXCELLENCE ONLINE CPA REVIEW @ (074) 665.6774 @ 0919093 8620 © suppor@reocpareview,ph MAY 2023 CPA REVIEW SEASONPage 6 of 7 | RFBT Physical Handout 05 REAL M.AZORES, B. BAKILAN, & E. sana eB EXCELLENCE Law on Partnership 3.86 ard nr cena P7020 F200 7200 a ot pagan Sr is the limited partner. Ifon) as wb P59, 000 te partner 1B p30.000 and to partner C ~ P20,000. Which ofthe following is correct if there is no profit and loss sharing agreement? B.CawD. a. Y collects P30,000 from the partnership P5,000 each from partners A, B, C an b. Gis exempt from loss hence, he can recover the P20,000 abigation pita pacer ne from either A, B or D. c. The P20,Q00 obligation of the partnership to C can be used to offset C's capi @. Yeoteets P30,000 rom te partnership and the balance of P20,000 will be collected from A, B and D in equal share ; 39. A, B, and C are partners who contributed P30,000, 15,000 and industry, respectively. After payment of all liabilities and expenses only P18,000 remain as partnership assets. A will get a. P9,000 b. P12,000 P18,000 dd. P5,000 40. na partnership, the liability of partners shall be joint and solidary |. Obligations in favor of partnership suppliers by virtue of sales contract I, Obligations in favor of a partnership client for return of deposits misappropriated by one of the partners Il. Obligations in favor of a pedestrian hit by the delivery van driven by one of the partners in the course of partnership business a. tandit b. Mand tl c. land @._llland it 41. A,B, and C are partners in ABC Company. D represented himself as a partner in the partnership to E who, on the belief of such representation, extended credit of P50,000 to the partnership. Assuming only B and C consented to such representation, who shall be liable to E? a. AllofA, B,C, and D are liable because of partnership liability for the credit extended to the partnership E. b. B,C, and D are partners by estoppel and thus, are liable to E pro rata ¢. Partners A, B, and C are liable to E for the benefit extended to them. d. Only D who made the representation is liable to E. 42. Which of the following is an automatic ground for dissolution of general partnership? a. The business of the partnership can only be carried on at a loss. b. Apartner is shown to be of unsound mind. c. Apartner has been guilty of such conduct as tends to affect prejudicially the carrying on of the business, d. A partner is civilly interdicted. 43. Which of the following claims shall be paid last in the liquidation of general partnership? a. Those owing to partners in respect of profits b. Those owning to the creditors other than partners. c. Those owing to partners in respect of capital Those owing to partners other than capital and profits ‘44. L, a limited partner in B Company, Ltd. received the amount of P100,000 representing his contri returned on the date stipulated in the certificate. Partnership records, however, showed ‘that the frm hal ened 220,000 which arose before L received the return of his contribution and assets of only P90,000 afte h contribution, Which is correct? " ereuch return of @. Lis bound to bring back to the partnership the amount of P100,000 plus Lis bound to vie the partnership the amount of P220,000 plus interest feed “en 5 fie bound por the partnership P130,000 plus interest. is not bound to return to the partnership any amour i lea bound i ou any amount because he teceived the return of his contribution pursuant 45. J, E,W, E, and L are partners in JEWEL Company, Ltd. J, E, and Ware while Lis a limit mati General partners, E is a general- ited partner. Based on the foregoing information, which of the following statements is ‘ater Panne, REO CPA REVIEW PHILIPPINES. \wnw reocpareview.ph Effectiveness, Efficiency. Convenience REAL EXCELLENCE ONLINI © (074) 655.6774 0919093.0520 © supponereccsarevew.ph. MAY 3029 GPa Ry fa soe EVIEW SEASONPage 7 of 7 | RFBT Physical Handout 05 REAL M.AZORES, B. BAKILAN, & E. BANGGAWAN @m@ EXCELLENCE Law on Partnership a. JE, and Wmay be held liable with their separate property after the exhaustion of partnership assets bE may participate in the management of the partnership ¢. Emay not be held liable with her separate property of partnership debts after the exhaustion of partnership assets dL may be held liable with her separate property for partnership debts after the exhaustion of partnership assets 46. Which of the following is true about a loan extended by a limited partner to the partnership? a. The partner-creditor cannot receive or hold a collateral secunty any partnership property b. The partner-creditor cannot receive from general partner or the partnership any payment, conveyance or release from liability if all the time assets of the partnership are not sufficient to discharge partnership liabilities to persons rot claiming as general or limited partners. ‘c. Any violation of (a) of (b) would be considered as fraud on the creditors of the partnership 4d. None of the above 47, Statement 1: After dissolution, the partners can still enter into new business transactions in the name of the dissolved partnership although not for the purpose of winding up partnership affairs. Statement 2: Insanity of either general or limited partner in a limited partnership shall dissolve the partnership. a. Both statements are false b. Both are true ¢. Fist is false, second is true 4d. Firstis true, second is false 48. A limited partner who takes active participation in the management of the partnership shall become a. Amanaging partner b. Ageneral partner ¢. Liable as general partner d._ Anostensible partner 49. As regards a limited partner, which of the following is correct? ‘a. He is automatically an agent for the partnership with apparent authonty to bind the limited partnership in a contract b. He cannot own limited partnership interest in other competing limited partnership ¢. He has no liability to creditors even if he takes part in the control of the business as long as he is held out as being a limited partner 4. He can contribute money and/or property but not services 50. Statement 1: As a rule, a limited partner whose sumame appears in a partnership name contrary is liable as a general partner to partnership creditors. Statement 2: Ifthe limited partner takes part in the control of the business, he is likewise liable as a general partner. a. Both statements are correct b. Only the first statement is correct ¢. Only the second statement is correct 4. Both statements are not correct. nothing follows-— REO CPA REVIEW PHILIPPINES. Effectiveness. Efficiency. Convent www.reocpareview.ph REAL EXCELLENCE ONLING CPA REVIEW © (074) 665 6774 @ 0919093 6620 © suppong@reocpareviow ph MAY 2023 CPA REVIEW SEASONPage 1 of 7 | RFBT Physical Handout 06 REAL Law on Corporation ~ Part! EXCELLENCE MAZORES, B. BAKILAN, & © BANGGAWAN ATED LAW ON CORPORATION — Part | M.AZORES, B. BAKILAN, & E. BANGGAWAN Definition of corporation Classes of corporations Nationality of corporations a. Control test b. Grandfather rule Corporate juridical personality a. Doctrine of separate juridical personality + Liability for tort and crimes + Recovery of damages b. Doctrine of piercing the corporate veil © Grounds for application of doctrine ‘* Test in determining applicability Capital structure Number and qualifications of incorporators Subscription requirements Corporate term Classification of shares. Preferred shares versus common shares ‘Scope of voting rights subject to classification Founder's shares Redeemable shares Treasury shares 6. Incorporation and organization Promoter ‘Subscription contract Pre-incorporation subscription agreements Consideration for stocks Articles of Incorporation * Contents + _Non-amendable items Corporate name; limitations on use of corporate name Registration, incorporation and commencement of corporate existence + Election of directors or trustees Adoption of by-laws * Contents of by-laws + Binding effects + Amendments i, _ Effects of non-use of corporate charter 7. Comporate powers General powers; theory of general capacity Specific powers; theory of specific capacity Power to extend or shorten corporate term Power to increase or decrease capital stock or incur, create, increase bonded indebtedness Power to deny pre-emptive rights eye aose eaegD oe paoce REO CPA REVIEW PHILIPPINES Meee ELLENCE ONLINE CPA REVIEW. @ (074) 6656774 @ 0919093 8620 © suppont@reocpareview phPage 2 of 7 | RF8T Physical Handout 06 REAL M.AZORES, B, BAKILAN, & E. BANGGAWAN EXCELLENCE Law on Corporation ~ Part | Power to sell or dispose corporate assets ‘own shares Power to invest corporate funds in another corporation or business Power to deciare dividends Power to enter into management contract Ultra vires acts Doctrine of individuality of subscription Doctrine of equality of shares Trust fund doctrine parckccse> Drill Problems: 4. Under the Revised Corporation Code, which of the following statements is false? a. Two corporations may form another corporation, b. An individual can form a corporation ._ Individuals cannot form a corporation to practice their profession 4. Incorporators must be residents of the Philippines and shall not exceed 15 2. A corporation commences to have juridical personality on a. The date of the submission of articles of incorporation to SEC b. The meeting of the minds of the incorporators Upon issuance of the certificate of incorporation ._Upon submission of bylaws to SEC 3. Preferred shares are entitied to vote in the following matters, except a. Amendment of bylaws b._ Increase of capital stock ¢. Entering into a management contract 4. Dissolution of corporation 4. Which of the following corporations do not require a favorable recommendation from the appropriate government agency? a. Pawnshops b. Educational institutions ©. Banks d._Pre-need companies 5. The certificate of incorporation of a corporation shall be deemed revoked if it does not formally organize within how many years from the date ofits incorporation? a. 2years b. 3years ©. 5years d. 10years 8. The minimum amount of paid-up capital incase of increase in authorized in capital stock under the Revised Corporation ode is: 2, 25% of the subscription but not ess than 5,000 b. 25% of the subscription ©. There is no longer a minimum paid-up capital requirement d. Not less than 5,000 7. Astock that s issued without consideration or below par value or the issued price is known as a. Watered stock b. Delinquent stock ©. Redeemable stock “d._ Preferred stock 8. The legal fiction that a corporation is an entity with a juridical personality separ stockholders may be disregarded and the corporation willbe cence ias fe ners ee from its members or liability will attach directly to the officers and the stockholders ‘ation of persons, such that REO CPA REVIEW PHILIPPINES: i wwwreocpareview:ph ep ___ Effectiveness. Efficiency. Convenience _ REAL EXCELLENCE ONLINE CPA REVIEW IGreocpareview ph MAY 2023 CPA REVIEW SEASON :Page 3 of 7 | RFBT Physical Handout 06 REAL M.AZORES, B. BAKILAN, & E. BANGGAWAN aw on Corporation — Part | eB EXCELLENCE Law on Corporation — Pat a. Doctrine of Separate Personality b. Theory of Concession ©. Doctrine of Piercing the Veil of Corporate Fiction rine of Limited Liability a. Whatwvote is needed fo change the name of LOVE Corporation to HEARTBROKEN Corporation? a, Majority of the Board of Directors b. Majority of the Board of Directors and outstanding capital stock &Maoiy ofthe Boar of Delors and 28 ofthe outstanding capa tock | d. Majority of the Board of Directors and 2/3 of the outstanding commo' 10, The subscriber of unpaid shares which are nol delinquent shal be enti tothe flowing rights, except the ight to a. vote b._ inspect corporate books. c. astock certificate d. dividends 411. Consolidation differs from merger in that in consolidation: a, The surviving corporation shall enjoy all the rights, powers and attributes of a corporation under the Corporation Code. The existing liabilities of the constituent corporations shall be assumed by the surviving corporation. The corporate existence of all the constituent corporations shall be extinguished and a new corporation emerges. The surviving corporation shall possess all the rights, privileges, immunities and franchises of the constituent corporations. 12. ABC Corp. increased its capital stocks from Php 10 Million to Php15 Million and, inthe process, issued 1,000 new shares divided into Common Shares "B" and Common Shares "C." T, a stockholder owning 500 shares, insists on buying the newly issued shares through a right of pre-emption. The company claims, however, that its By-laws deny T any right of pre-emption. Is the corporation correct? a. No, since the By-Laws cannot deny a shareholder his right of pre-emption b. Yes, but the denial of his pre-emptive right extends only to 500 shares ©. Yes, since the denial of the right under the By-laws is binding on T 4, No, since pre-emptive rights are governed by the articles of incorporation. 13. X Corp., whose business purpose is fo manufacture and sell vehicles, invested its fund: through a resolution of its Board of Directors. The investment business judgment. But a minority stockholder in X Corp. assai what is the status of the investment? a. Yes, itis an ultra vires act ofthe corporation itself but voidable only, subject to stockholders’ ratification b. Yes, itis an ultra vires act of its Board of Directors and thus void, ©. Yes, itis an ultra vires act of its Board of Directors but voidable only, subject to stockh 4. Yes, itis an ultra vires act of the corporation itself and, consequenty, void 14. The rule is that no stock dividend shal be issued witout the approval of stockholders representing at least 219 of the utstanding capital stock at a regular or special meeting called for the purpose. As to other forms of dividaaue. . Amere majority of the entire Board of Directors applies, b. Amere majority of the quorum of the Board of Directors applies. ¢ Amere majoity ofthe votes of stockholders representing the outstanding capital stock applies 4. The same rule of 2/3 votes applies 18, The SEC approved Lugi Corporation's amended AOI to shorten its corporate term. As shortened 7 last day of corporate existence will be on July 31, 2021. On July 5, 2021 Age Merchandising sold to Lagh oe 4 Macheraerchandise on credit witha total amount of 600,000, payabie within 30 days. On August S, Sone woe Merchandising sent ei Corporation a Statement of Account to collect the 500,000. The President of Lugi Corpération repli je in it Fier tere Merthandising can no longer colect trom & since is corprale exsence already caer ete a. Yes, dissolution shall automatically take effect on the d FG. acttion shal automaticaly lay of he following the last day ofthe corporate term stated b. Yes, ABC Merchandising must collect from the Board of Directors themselves. aes is in Y Corp., an investment firm, grew tremendously on account of Y Corp.'s excellent iis the investment as ultra vires. Is he right and, if so, jolders’ ratification REO CPA REVIEW PHILIPPINES Effectiveness. ww.reocpareview.ph ess. 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