Every variable contract form delivered or issued for delivery in the Philippines, and every certified form evidencing variable benefits issued pursuant to any such contract on a group basis, and the PDF

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Every variable contract form delivered or issued for delivery in the Philippines, and every certified form evidencing variable benefits issued pursuant to any such contract on a group basis, and the...

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PHIL. CPA LICENSURE EXAMINATION

REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS

Obligations 1. Which of the following statements is the BEST description of a “condition”? A. A term which must be satisfied before a contract can come into existence. B. A term in a contract which provides that the contract will terminate on the happening of a particular event. C. A term in a contract, non-performance of which may result in rescission of the contract and/or damage to the plaintiff. D. A tern in a contract, the consequence of breach of which cannot be determined until after the breach has occurred and the seriousness of the effects of the breach can be ascertained.

5.

Which of the following circumstances will payment of lesser amount fail to discharge a debt, despite a creditor’s promise to accept the lesser amount in full satisfaction of the debt? A. Where the creditor has requested that the debtor pay the lesser amount on an earilier date. B. Where the creditor has requested that the debtor pay the lesser amount at a different place. C. When the creditor has requested that the debtor pay the lesser amount by cheque instead of cash. D. Where the creditor has requested that the debtor accompany payment of the lesser amount with some other act they were not originally bound by the contract to perform.

2.

Which of the following situations is the BEST example of executor consideration? A. Anton pays Manny P50 today, in return, for Manny giving Anton an orange today. B. Anton promises to pay Manny P50 tomorrow, in return, for Manny giving Anton, an orange tomorrow. C. Anton promises to pay Manny P50 tomorrow, in return, for Manny giving Anton, an orange yesterday. D. All of the above.

6.

3.

Betina Furniture Co. undertook to deliver to Mr. Magsaysay specified places of living room, dining room and bedroom furniture – all made of narra, for a price stated in the contract. The contract had a penal clause that any violation of the contract would entitle the aggrieved party to damages in the amount of P100,000. The furniture delivered by Betina was made, not of narra but of inferior wood. In a suit to recover damages, Mr. Magsaysay was able to prove that the actual damages he sustained amount to P200,000. If you were to decide based on legal ground, how much claim would you award to Mr. Magsaysay? A. P50,000 C. P200,000 B. P100,000 D. P300,000

Which of the following condonations will NOT extinguish the debtor’s obligation? A. The condonation and the acceptance are in a public instrument. The condonation involves a parcel of land. B. The condonation is in a public instrument. The acceptance is made orally. The condonation involves a computer printer whose value is P4,000. C. The condonation and the acceptance are made orally with the creditor delivering to the debtor simultaneously the promissory note amounting to P10,000. D. The condonation is in a public instrument. The acceptance is made in a private instrument. The condonation involves a television set worth P20,000.

7.

Under the law, anything paid or delivered before the arrival of the suspensive period the obligor being unaware of the period, may be recovered with the fruits and interest. Which is the EXCEPTION? A. The obligor is not aware of the period. B. The obligor delivered before the period. C. The period is for the benefit of the creditor and debtor. D. The obligation involved is an obligation to do and not to do.

8.

The following are the requisites for the filing of subrogatory action, EXCEPT A. the act being impugned is fraudulent. B. the credit must be due and demandable. C. the creditor has a right of credit against the debtor although at the moment is not liquidated. D. there must be a failure of the debtor to collect from third persons whether willfully or through negligence.

4.

Demand is necessary in this situation for the debtor to be in delay A. When the time is a controlling motive. B. When the obligation has been fulfilled. C. When the debtor delivers a wrong thing in the due date. D. When the obligor has rendered it beyond his power to perform.

OCTOBER 2019

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PHIL. CPA LICENSURE EXAMINATION Contracts 9. Which of the following statements relative to contracts is INCORRECT? A. If both parties are minors, the contract is unenforceable. B. If one party is a minor and other is not, the contract is voidable. C. A contract entered into while in state of drunkenness is voidable. D. If the insane party entered into the contract during a lucid interval, the contract is voidable. 10. For a contract to exist, the agreement that was negotiated between the parties MUST A. contain a promise which is exchanged for something of value. B. contain a commitment in undertaking to abide by the agreement. C. clearly evidence the promise between the promisor and the promisee. D. all of the choices. 11. Which of the following situations appears to involve a conduct that amounts to “unconscionability” which can be used as a defense to challenge the validity of contract? A. A woman gave all of her property to the religious order of which she was a member. B. A man induced another to sign a contract by telling him that if he did not, he would report his son to the police for committing a criminal offense. C. An elderly couple sign a mortgage in favor of a Bank guaranteeing their son’s debt, the Bank manager knows that the couple are unaware of the son’s financial difficulties. D. All of the choices. 12. Samson, Inc. and Goodfit Construction, Inc. are only construction companies available to bid of the construction of the new building at the Katipunan Institute of Technology. Executives from the two companies agreed to fix the bids so that Samson, Inc. wins one contract and Goodfit Construction, Inc. the other contract. Samson, Inc. reneges on the deal and wins both contracts, Goodfit Construction, Inc. sues for breach of contract. Will Samson, Inc. win? A. No, agreements to defeat competitive bidding are illegal. B. Yes, agreements to defeat competitive bidding are legal. C. Yes, agreements to defeat competitive bidding are legal only in the construction industry. D. No, agreements to defeat competitive bidding are illegal only in the construction industry. 13. The following are the requisites for the filing of rescissory action, EXCEPT A. the act of being impugned is fraudulent. B. the right and actions are not purely personal or inherent in the person of the debtor. C. the debtor has made a subsequent contract conveying a patrimonial benefit to a third person. OCTOBER 2019

REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS D. the third person who received the property conveyed of, by onerous title, has been an accomplice in the fraud. 14. Roy and Carlos undertook a contract to deliver to Raul in Manila a boat docked Subic. Before they could deliver it, however, the boat sank in a storm. The contract provides that fortuitous events shall not exempt Roy and Carlos from their obligations. Owing to the lost of the more boat, such obligations is deemed converted into one of indemnity for damages. Is the liability of Roy and Carolos joint or solidary? A. Solidary or joint upon the discretion of Raul. B. Neither solidary nor joint since they cannot waive the defense of fortuitous event. C. Joint since the conversion of the liability to one of indemnity for damages made it joint. D. Solidary, sine Roy and Carlos failed to perform their obligation to deliver the motor boat. 15. Mr. A was appointed by the court as guardian of the minor X. Mr. A sold the vegetables that were planted in the lot of X. The value of the vegetable is P5,000 but Mr. A sold the vegetables for only P2,000. The contract is A. Rescissible C. Void. B. Unenforceable. D. Voidable 16. A, a minor, 16 years of age, together with his brothers B and C, both of legal age are jointly and severally liable in a contract of loan to pay X the amount of P120,000. Upon maturity of the obligation, A A. is liable to pay the amount of P30,000 B. is liable to pay the amount of P60,000 C. is liable to pay him the whole amount of P120,000. D. is liable to pay only the amount which benefits him. Sales 17. Knowing that the car had a hidden crack in the engine, X sold it to Y without informing the latter about it. In any event, the deed of sale expressly stipulated that X is not liable for hidden defects. Does Y have the right to demand from X a reimbursement of what he spent to repair the engine plus damages? A. No, because Y waived the warranty against hidden defects. B. Yes, X is liable whether or note he was aware of the hidden defect. C. No, because Y is in estoppel, having changed the engine without prior demand. D. Yes, since the defect was not hidden; X knew of it but he acted in bad faith in not disclosing the fact to Y. Page 2 of 12

PHIL. CPA LICENSURE EXAMINATION 18. In case of eviction, the vendor shall be liable to the vendee only for the value of the thing sold at the time of eviction in which of the following cases? A. Where there is waiver consciente. B. Where there is waiver intencionada. C. When the vendor was in bad faith and there was stipulation exempting the vendor from liability in case of eviction. D. When the vendor was in bad faith and there was no stipulation exempting the vendor from liability in case of eviction. 19. Mr. Seller and Mr. Buyer orally agreed on the following • The land to be sold has an area of 10,000 sq. meters; • Price is P5 million; and • Mr. Seller shall prepare the deed of sale. With fraudulent intent, Mr. Seller knowing the inadequacies of Mr. Buyer with respect to numbers, write 1,000 sq. meters instead of 10,000 sq. meters win the deed of sale. The sale is A. void. B. valid but the contract may be reformed. C. valid but the instrument may be reformed. D. voidable but the contract may be reformed. 20. Which of the following is NOT an essential element of a contract of sale? A. There must be some price for the goods. B. There must be transfer of ownership of goods. C. There must be some goods as subject matter. D. There must be transfer of possession of goods. 21. A agreed to sell B all the 100 bales of long staple Philippine cotton lying in his bodega. Unknown to both parties, the cotton had already been destroyed in an accidental fire. In this case, the contract of sale is A. Voidable, at the option of the buyer. B. Voidable, at the option of the seller. C. Void, as the contract of sale is for specific goods. D. Not void, as the contract of sale is for unascertained goods. 22. Where before making the contract of sale, the goods had perished without the knowledge of the seller, the contract of sale is void if the contract is for the sale of A. contingent goods C. specific goods B. future goods D. unascertained goods. OCTOBER 2019

REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS 23. The specific goods are those goods which are identified A. at the time of contract of sale. B. after the formation of contract of sale. C. during the performance of contract of sale. D. at the time of enforcement of contract of sale. 24. Where after the agreement to sell for the sale of specific goods, the goods perish without any fault of the buyer or seller, the contract of sales becomes void if the goods perish A. after the risk passes to the buyer. B. before the risk passes to the buyer. C. without any knowledge of the seller. D. without any knowledge of the buyer. 25. S sold a parcel of land to B for P100,000 with B paying the said amount immediately. Although S delivered the transfer certificate of title of the land to B, the parties did not execute any document at all for the sale except the receipt for the payment which S issued to B. B now wants to register the receipt for the payment which S issued to B. B now wants to register the sale with the Register of Deeds. A. The contract between S and B is rescissible; hence B can sue for damages. B. The contract between S and B is void because it was not in the form required by law. C. B cannot compel S to execute a Deed of Sale because the contract is unenforceable. D. B can compel S to execute a Deed of Sale which is duly notarized so that B can register the sale. Law of Credit Transactions Pledge, Real Mortgage and Chattel Mortgage 26. In the sale of thing pledged, where the proceeds of the sale are less than the amount due, when can the pledgee recover the deficiency? A. In the case of pawnshops. B. In case of pledge by operation of law. C. If there is a stipulation allowing such recovery. D. The pledgee can never recover the deficiency. 27. A pledge agreement allowed the pledgee to transfer the pledge shares in pledge’s name in the corporate books if the pledger fails to remedy a payment default within thirty (30) days from receipt of a written demand from the pledgee. Is the stipulation VALID? A. No, because it constitutes pactum commissorium. B. Yes, because the transfer is only as act of administration. Page 3 of 12

PHIL. CPA LICENSURE EXAMINATION C. No, because it dispenses with the payment of taxes due on to the transfer. D. Yes, because the transfer is not automatic, i.e., only after pledger fails to pay during the period. 28. B purchased a motor vehicle from S for P1,200,000, payable by a downpayment of P600,000 and the balance in 12 monthly installments of P50,000 each. A chattel mortgage on the vehicle was executed to serve as security. B defaulted on the 7th and 8th monthly installments. The chattel mortgage was foreclosed but the auction sale resulted into a deficiency of P100,000. Under R.A. 1508, as amended, otherwise known as the Chattel Mortgage Law, in relation to Article 1484 of the Civil Code, more popularly known as the Recto Law, what is the remedy of S to recover the deficiency? A. Cancel the installment sale. B. No other remedy on the deficiency. C. File a collection suit for P100,000 against B. D. Auction the other properties of B for P100,000. 29. Which of the following statements relative to the R.A. No. 1508, as amended, otherwise known as the Chattel Mortgage Law, is FALSE? A. Aside from the Chattel Mortgage Registry of the Registrar of Deeds where the property is located, registration shall also be made where the mortgagor resides if he resides in a place other than where the property is located. B. Where the parties executed a chattel mortgage on a building, they shall be bound to the chattel mortgage contract. C. Failure to execute the Affidavit of God Faith and to register the chattel mortgage contract shall invalidate the mortgage. D. Registration of the chattel mortgage is made in the Chattel Mortgage Registry of the Register of Deeds where the property is located. Insolvency Law Corporate Rehabilitation Negotiable Instruments & Bouncing Checks Law Negotiable Instruments 30. Which of the following statements renders an instrument not payable in sum certain for money and hence non-negotiable? A. Cognovits actionem. OCTOBER 2019

REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS B. Stipulation to pay interest. C. Option to the drawer to pay in kind. D. Option to the holder to require payment in kind. 31. Which of the following exemplifies negotiation within the meaning of the Negotiable Instruments Law? A. A promissory note executed by M in favor of P is indorsed and delivered by P to A. B. A promissory note executed by M in favor of bearer is delivered by M to P for safekeeping. C. A promissory note executed by M in favor of P or his order is delivered by P to A without indorsement. D. None of the above. 32. M made a promissory note payable to P or bearer. P specially indorsed the note to A. A also specially indorsed it to B. X stole the note from B and delivered it to C without any indorsement. Who may he held liable to C? A. X only. C. M, P, A and X only, B. M and X only. D. M, P, A, B and X. 33. M made a promissory note for P100,000 payable to P or order. P altered the amount by increasing it to P150,000. P then endorsed it to A, and A to B, present holder in due course. Which of the following statements is CORRECT? A. M, P and A are liable to B for P150,000. B. M, P and A are not liable to B for the material alteration. C. M is not liable to B; P and A are liable to B for P150,000. D. M is liable to B for P100,000; P and A are liable to B for P50,000 Bouncing Checks Law 34. Which of the following statements regarding BP22 is FALSE? A. Prosecution in a BP 22 case must establish that a written notice of dishonor was actually received by the maker or drawer of the dishonored check. B. A drawer of a dishonored check may be convicted under BP 22 even if he had issued the dishonored check for payment of pre-existing obligation C. The constitutional guarantee that no person shall be imprisoned for non-payment of debt was held to be valid defense if a drawer or maker who issued a dishonored check upon its presentation for payment. D. None of the choices. Page 4 of 12

PHIL. CPA LICENSURE EXAMINATION 35. BP 22 uses the phrases “any check” and “a check” in defining the offenses sought to be punished by it. Which of the following types of checks is NOT within the purview of the punitive provisions of BP 22? A. Accommodation check. C. Corporate check. B. Cashier’ check. D. Personal check. Law on Business Associations Partnership 36. When a partnership dissolves and winds up, of the following, who would be the LAST to receive distribution of partnership assets? A. The creditors of the partnership. B. The partners in repayment of loans. C. The partners in repayment of profits. D. The partners in repayment of capital 37. W, X, Y and Z organized a general partnership with W and X as industrial partners and Y and Z as capitalist partners. Y contributed P5M and Z contributed P2M to the common fund. By a unanimous vote of the partners, W and X were appointed managing partners, without any specification of their respective powers and duties. A, applied for the position of Secretary and B, applied for the position of Accountant of the partnership. The hiring of A was decided by W and Z but was opposed by X and Y. Who of the applicants should be hired by the partnership? A. A only. C. Both A and B. B. B only. D. Neither A nor B..

REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS C. Leo buying a van for the partnership from Joy who has no knowledge of Leo’s lak of authority. D. Butch buying rice from the partnership from Teddy who has no knowledge of Butch’s lack of authority. 40. Every contract of partnership having a capital of three thousand pesos or more, in money or property shall appear in a public instrument, which must be recorded in the SEC. Failure to comply with this requirement A. Renders the contract of partnership void. B. Renders the contract of partnership unenforceable. C. Affects the liability of the partnership to third persons and the partnership has no legal personality. D. Does not affect the liability of the partnership to third persons and the partnership have a legal personality. 41. Which of the following statements relative to partnership and partners is INCORRECT? A. A person who receives the profits is always a partner. B. A person who receives the profit is not necessarily a partner. C. The partnership comes into existence only thru an agreement. D. The true test of partnership is the mutual agency, i.e., agency relationship among partners.

38. On the death of a partner, public notice of death is not given and the partnership continues the business, then for the acts of the partnership done after his death, the estate of the deceases partner is A. liable. C. proportionally liable. B. not liable. D. treated as security

42. X, Y, and Z are partners in XYZ Partnership, Ltd. With Y as limited partner. After five years of operations, the partnership incurred debtor in favor of third persons totaling P5 million. The total partnership asset is P3M. Who among the partners shall be liable with their separate property, in favor of creditors? A. X and Y for P1 million each. B. X, Y and Z for P1 million each. C. X, Y and Z depending upon their capital contribution. D. X and Z for P1.5 million each because they were general partners.
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