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ReSA - THE REVIEW SCHOOL OF ACCOUNTANCYCPA Review Batch 41  May 2021 CPA Licensure ExaminationREGULATORY FRAMEWORK for BUSINESS TRANSACTIONS Atty. J. Domingo  Atty. N. SorianoPage 1 of 14 0915 -2303213  resacpareview  Non-compliance with this kind of obligation gives a right of action to compel ...

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ReSA - THE REVIEW SCHOOL OF ACCOUNTANCY CPA Review Batch 41  May 2021 CPA Licensure Examination

REGULATORY FRAMEWORK for BUSINESS TRANSACTIONS

Atty. J. Domingo  Atty. N. Soriano

1. Non-compliance with this kind of obligation gives a right of action to compel performance. A. Natural Obligations B. Moral Obligations C. Civil Obligations D. All of the choices 2. Fluffy Iglesias is indebted to Marisol for P100,000. The debt became due and no payment was made by Fluffy. Eventually, the right of action prescribed before Marisol can initiate any court proceedings to compel performance. However, out of his own conscience, Fluffy eventually paid the P100,000. In this case, A. Fluffy can ask for the return of the P100,000 since the debt already prescribed. B. Fluffy can ask for the return of the P100,000 on the ground of solution indebiti. C. Fluffy cannot ask for the return of the P100,000 since Marisol has the right to retain payment. D. Fluffy cannot ask for the return of the P100,000 since ownership passes upon delivery of the same. 3. The obligation to give support is an obligation arising from: A. Law B. Contract C. Quasi-contract D. Quasi-delict 4. Juan obliged himself to deliver a specific or determinate TV set to Pedro. If Juan fails to perform his obligation, what is/are the remedies of Pedro? A. Specific Performance B. Substitute Performance C. Both A and B D. Neither A nor B 5. When the debtor binds himself to pay when his means permit him to do so, the obligation is deemed: A. Subject to a suspensive condition B. Subject to a resolutory condition C. One with a suspensive term D. One with a resolutory term 6. Mark, while driving recklessly the cab of his employer, hit a Meralco post and caused serious physical injuries to Mary, a passenger. Mary can sue Mark and make him liable under: I. Contract II. Quasi-Contract III. Delict IV. Quasi-Delict A. All of the above B. All except III

C. III and IV only D. I and IV only

7. First Statement: If an employer is sued for vicarious liability under quasi-delict, he can validly raise the defense of diligence in the selection and supervision of the employee. Second Statement: If an employer is made subsidiarily liable on the criminal action against his employee, he can validly raise the defense of diligence in the selection and supervision of the employee. A. Both statements are true B. Both statements are false C. Only the first statement is true D. Only the second statement is true 8. On June of 2020, S promised to sell to B, his house and lot, rented by another, should B

pass the CPA Board Exams. B took and passed the October 2020 Board Exams. Who would be entitled to the rent from the time S promised to sell to Rochelle until the happening of the suspensive condition?

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0915-2303213  www.resacpareview.com

ReSA – THE REVIEW SCHOOL OF ACCOUNTANCY FIRST PRE – BOARD EXAMINATION (BATCH 41)

A. B, since the happening of the condition retroacts to the day of the constitution of the obligation. B. S, because he is the owner of the house and lot during the time mentioned C. B, because the obligation is unilateral and S is required to appropriate the rents in favor of Rochelle D. S, because the obligation is reciprocal, thus the fruits are deemed mutually compensated 9. Ms. X, a Filipino citizen who resides in the US, instructed her bank to make a transfer of US$1,000. Mellon Bank US facilitated the transfer but, by mistake, transferred US$1,000,000 to the account of Ms. Y in Prudential Life Philippines. Mellon Bank now sues for the recovery of the excess US$999,000. On what ground may the recovery be allowed? A. Contract B. Quasi-contract C. Delict D. Quasi-delict 10. The civil liability arising from a crime requires: A. Proof beyond reasonable doubt B. Preponderance of evidence C. An iota of evidence D. Any of the choices 11. W, X, Y, Z are solidarily indebted to C for P40,000. When C demanded payment from W, the latter raised the following defenses: X is a minor, Y’s share was already condoned and that Z is insolvent. How much is W required to pay C? A. P40,000 C. P20,000 B. P30,000 D. P10,000 12. Mr. D, a driver of a jeepney owned by Mr. O, while driving recklessly, hit a pedestrian, Mr. X and injured his passenger Mr. P. Mr. P can sue for damages against Mr. O on the ground of: A. Delict B. Delict and Quasi-Delict C. Delict, Quasi-Delict and Contract D. Delict, Quasi-Delict, Contract and Quasi-Contract 13. A potestative suspensive condition solely dependent on the will of the debtor: A. Does not affect the validity of the obligation B. Makes the obligation voidable C. Makes the obligation void D. Is void and thus the obligation is treated as a pure obligation 14. Which of the following is false regarding a facultative obligation? A. The right to substitute is with the debtor B. The right to substitute can be expressly granted to the creditor C. If the principal prestation is lost due to fortuitous events, before substitution, the obligation is extinguished D. If the substitute prestation is lost due to fortuitous events, after substitution, the obligation is extinguished 15. Armin was hired by Barbie for piano lessons which will begin 6 months after they entered the contract. 3 months prior to the start of the contract, Armin was killed in an accident. Is Armin Jr., the son of Armin obliged to teach piano lessons to Barbie? A. No, if Armin Jr. is not capable of teaching piano lessons B. Yes, because contracts take effect between the parties, their assigns and their heirs C. No, because the contract between Armin and Barbie is personal in nature and not transmissible D. Yes, because Armin Jr. would inherit not only the properties of Armin but also his

obligations

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ReSA – THE REVIEW SCHOOL OF ACCOUNTANCY FIRST PRE – BOARD EXAMINATION (BATCH 41)

16. A promised to deliver to B his car if the latter passes the October 2020 CPA Board Exam. On June 15, 2020, A changed the tires of the car to a more expensive brand. B passed the CPA Board Exam, in this case: A. A would be entitled to reimbursement for the cost of the tires with the right to withhold delivery B. A can withhold delivery until he is paid the cost of the tires C. A can remove the tires if he is not paid the cost of the tires even if it causes damage to the car D. A can only remove the new tires provided it will not cause damage to the car 17. D is indebted to C for P100,000 secured by a mortgage executed by M on his lot and a guaranty by G. Which of the following is false if M offers to pay the loan? A. C can be compelled to accept the payment B. M will be subrogated to the rights of C after payment is made C. M can later on collect from G if D fails to pay M D. If it turns out that D already paid half of the loan, M can only collect P50,000 18. D promised to deliver to C his car worth P250,000, his laptop worth P80,000 or his diamond ring worth P40,000. All the objects were lost in the order they were mentioned through the fault of D. Which of the following is correct? A. D is liable for P250,000, the value of the car B. D is liable for P80,000, the value of the laptop C. D is liable for P40,000, the value of the ring D. D is liable for the value of whatever C chooses 19. A contract of loan was entered into where A, B, C, D and E are individually liable for P100,000 to X and Y, joint creditors. Which of the following is correct? A. X can demand the whole P100,000 from any one of A, B, C, D and E. B. Y can demand only P20,000 from A, B, C, D and E, separately. C. A may be compelled to pay P50,000 to either X or Y. D. B may be compelled to pay P10,000 by either X or Y 20. X, crossing a pedestrian lane, did not see that the light was red. He was hit by a car driven by Z. In this case, A. Z is not liable for damages since X was himself negligent in crossing the street B. Z’s liability can be reduced due to the contributory negligence of X C. X’s negligence was the direct and proximate cause of the injury D. X can recover damages since he was not negligent 21. Ms. Lessee rented an apartment unit from Mr. Lessor. They agreed that Ms. Lessee would pay for a one-month deposit and one-month advance and would shoulder all utility costs during the length of her possession. Ms. Lessee, without notice, left the apartment unit and never returned, leaving an unpaid electric bill of P4,800. From whom can the electric company collect? A. Ms. Lessee, because they stipulated in the contract that the Lessee is liable to pay the utility bills B. Mr. Lessor, because there was no valid substitution in the person of the debtor C. Ms. Lessee and Mr. Lessor, equally D. Neither Ms. Lessee nor Mr. Lessor 22. Compensation is not proper in all of the following cases, except: A. Deposit on the part of the depositary B. Bail as to the bailor C. Support as to the one obliged to give support D. Civil liability arising from a penal offense 23. Consignation alone, without tender of payment, will release the debtor from responsibility in all of the following cases, except: A. When the creditor is absent or unknown, or does not appear at the place of payment

B. When he is incapacitated to receive the payment at the time it is due C. When the creditor validly refuses to give a receipt D. When two or more persons claim the same right to collect Page 3 of 14

ReSA – THE REVIEW SCHOOL OF ACCOUNTANCY FIRST PRE – BOARD EXAMINATION (BATCH 41)

24. A condition which suspends the efficacy of the obligation and depends upon the sole will of the debtor: A. Makes the obligation void B. Makes the condition void but does not affect the validity of the obligation C. Is known as a potestative resolutory condition D. Answer not given 25. When the service has become so difficult as to be manifestly beyond the contemplation of the parties, A. The obligation is automatically extinguished B. The obligation remains in force and the debtor is required to comply under all circumstances C. The difficulty can be a valid ground for the court to release the debtor from responsibility D. Answer not given 26. The debtor is deemed to have lost his right to make use of the period in all of the following instances, except: A. When after the obligation has been contracted, he becomes insolvent, unless he gives a guaranty or security for the debt. B. When he does not furnish to the creditor the guaranties or securities which he has promised. C. When by his own acts he has impaired said guaranties or securities after their establishment but not if they disappear through a fortuitous event, in which case, he is not required to provide an equally satisfactory security. D. When the debtor violates any undertaking, in consideration of which the creditor agreed to the period 27. D1 is indebted to C for P100,000. Prior to the due date, D1 suggested to C that D2, his brother, will be paying for the obligation, to which C agreed. On the due date, C collected from D2, but he was insolvent. In this case, A. D1 is liable to C since he volunteered D2 to take his place as debtor B. D1 not liable if the insolvency of D2 is already existing and of public knowledge C. D1 is liable only if the insolvency was already existing at the time of the substitution and was known to him D. D1 is not liable since there was a valid novation 28. X promised to deliver his car to Y if the latter would draw a square that is at the same time a circle. In this case, A. The obligation will be treated as a pure obligation B. The impossible condition is deemed not written C. The obligation is void for containing an impossible condition D. The condition may be disregarded 29. The following are generally void contracts, except: A. Contract of sale between the guardian and his ward concerning the property of the latter. B. Contract of lease between the executors and administrators and the estate concerning the property of the estate under administration. C. Contract of sale where the buyer is a government official entrusted with the administration of the subject property D. Contract of loan between the principal and an agent, where the latter was authorized to borrow money. 30. The following are real contracts which require delivery for perfection, except: A. Pledge C. Mutuum B. Chattel Mortgage D. Deposit

31. Which of the following is a preparatory contract? A. Lease C. Mortgage B. Partnership D. Loan

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ReSA – THE REVIEW SCHOOL OF ACCOUNTANCY FIRST PRE – BOARD EXAMINATION (BATCH 41)

32. Juan, who is indebted to Pedro for P100,000, sold his only remaining property to Jose. There would be a presumption that the sale was in fraud of Pedro: A. If Juan did not reserve sufficient properties to pay all debts contracted before the sale. B. If Juan did not reserve sufficient properties to pay all debts contracted before and after the sale. C. When there has been some judgment obtained by Pedro issued against Juan before the sale. D. When there has been some judgment issued against Juan before the sale even if not obtained by Pedro. 33. Which of the following can validly give consent to a contract: A. Insane persons B. Demented persons C. Minors D. Deaf-mutes who are blind 34. The following contracts are unenforceable if not in writing, except A. Sale of land worth P499 B. Sale of personal property for at least P500 C. Lease of a car with a term of more than 1 year D. Contract for a piece of work not to be performed within a year 35. An action for annulment of a sale of registered land on the ground of fraud would prescribe in 4 years from: A. Date of sale C. Registration of the sale B. Discovery thereof D. Delivery 36. Which of the following contracts cannot be ratified? A. Those whose cause or object did not exist at the time of the transaction B. Unauthorized contracts C. Those where one party is incapable of giving consent D. Those that fail to comply with the Statute of Frauds 37. A orally sold his cellphone to B for P15,000, where the latter paid P499 down-payment and the balance to be paid 30 days after. The contract entered into is: A. Valid and enforceable C. Void B. Rescissible D. Unenforceable 38. Juan obliged himself to deliver one of his five cars to Pedro, it was not specified which car. In this case, A. The contract would be interpreted following the least transmission of rights B. The contract would be interpreted following the greatest reciprocity of interests C. The contract is void D. They would need to undergo reformation to clarify which car. 39. Which of the following is false with regards the person who can institute annulment of a contract? A. Only the incapacitated or injured party or his guardian can ask for annulment. B. Creditors of the incapacitated party can ask for the annulment of the contract entered into by their incapacitated debtor C. Those who are capacitated cannot allege the incapacity of the other contracting party D. Answer not given 40. Juan offered to sell his house and lot to Pedro for P1,500,000. Pedro was convinced and accepted the same. Pedro gave P500 and was given 30 days to make good the balance of the price. Before the expiration of the 30 days, Juan withdrew and returned Pedro’s P500 because he found a new buyer who would pay twice the original price. In this case, A. Juan validly withdrew the offer since it is within the 30 day period. B. Juan cannot validly withdraw the offer since there was an option money of P500 that was given. C. Juan validly withdrew the offer since he is still the owner of the house and lot pending

delivery. D. Juan cannot validly withdraw the offer since there was already a perfected contract of sale. Page 5 of 14

ReSA – THE REVIEW SCHOOL OF ACCOUNTANCY FIRST PRE – BOARD EXAMINATION (BATCH 41)

41. Jose entered into a Contract to Sell with Mary concerning the former’s house and lot for P2,000,000. Immediately, Mary took possession of the house and lot but under the Contract to Sell, ownership will not transfer until full payment of the price. Mary was able to pay the full price 6 months after and accordingly, Jose executed a Deed of Absolute Sale. Ownership transferred upon A. Execution of the Contract to Sell B. Occupancy of Mary of the house and lot C. Full payment of the price D. Execution of the Deed of Absolute Sale 42. S delivered 1,100 sacks of rice to B, which is 100 sacks in excess of the quantity agreed upon, the buyer has the following options, except: A. Accept the quantity agreed upon and reject the rest. B. Accept the quantity delivered and pay at the contract rate. C. Reject the whole if the contract is indivisible. D. Reject the whole and ask for damages. 43. In order to validly exercise this right of an unpaid seller, the buyer must be insolvent: A. Possessory Lien B. Stoppage in Transitu C. Right of Resale D. Right of Rescission 44. Any affirmation of fact or any promise by the seller relating to the thing, if the natural tendency of such affirmation or promise is to induce the buyer to purchase the same, and if the buyer purchased the thing relying thereon. A. Condition C. Advertisement B. Express Warranty D. Marketing Disclosure 45. A sold his land to B with a right to repurchase the same within 10 years. A died, leaving A1 and A2 as heirs, prior to the expiration of the 10 year period. Which of the following is incorrect? A. A1 can exercise of the right of redemption only as to half the land. B. A2 can exercise of the right of redemption as to the whole land. C. B can compel the heirs to redeem jointly D. If A2 wishes to exercise his right of redemption as to half of the land, B cannot be compelled to accept a partial redemption 46. Juan bought a condominium unit from Bellagio Development Corporation (BDC) for P15,000,000 paying P3,000,000 as down-payment and the balance payable in monthly installments of P100,000. It was agreed that should the buyer fail to pay 2 or more installments, the contract shall automatically be cancelled and that all payments shall be forfeited in favor of BDC by way of rent. After paying 26 months’ worth of installments, Juan failed to pay the 27th and 28th installment and BDC deemed the contract rescinded. In this case (which is incorrect)? A. The rescission is not valid B. Juan is entitled to 90 days grace period C. Juan is entitled to P2,800,000 cash surrender value D. The stipulation providing for forfeiture of the payments is void 47. S sold to B a motorcycle worth P100,000, where B is required to pay P20,000 upon execution of the sale and the balance payable at the end of 2020. B executed a chattel mortgage on the motorcycle to secure his obligation. B, however, failed to pay the balance of P80,000 on due date and S foreclosed the mortgage. In this case, A. If the proceeds of the foreclosure is P70,000, S can still collect the deficiency. B. If the proceeds of the foreclosure is P90,000, S is entitled to the excess. C. If the proceeds of the foreclosure is P60,000, S can no longer collect the deficiency. D. If the proceeds of the foreclosure is P100,000, S can cancel the sale and demand the

return of the motorcycle.

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ReSA – THE REVIEW SCHOOL OF ACCOUNTANCY FIRST PRE – BOARD EXAMINATION (BATCH 41)

48. To defraud his creditors, S sold his land to B. B now seeks to register the land to which C, a creditor of S objected on the ground that the sale is rescissible for being entered into to defraud S’s creditors. Can B register the land? A. No, because the contract of sale is rescissible B. Yes, because the contract of sale has not been rescinded yet C. No, because the contract of sale was in fraud of creditors D. Yes, because the contract of sale is valid and its validity cannot be attacked collaterally in a land registration proceeding 49. Under this principle, the validity and compliance of a contract cannot be left to the will of one party: A. Relativity C. Obligatory Force B. Mutuality D. Autonomy 50. There is fraud: A. Usual exaggerations of in trade if the other party had an opportunity to know the facts B. An expression of an opinion, which turned out to be false, made by an expert and the other party relied on it C. A misrepresentation made in good faith D. Failure ...