* Mania 7539344,7347003 » Coby Cty O32 Since 1977 BUSINESS LAW Ne 1. This obligation is demandable at once: 2. pure obligation b. obligation subject to a re: obligation with an in den @ all of the above M, minor enters into a contract wit connection with the sale of a 500,000. Said contract is: Iutary condition erie 1, insane, in house and tot’ for a Valid Unenforceabie Db. Rescissible Voie ©. Voidable If the guardian of M in Problem No.2 rat contract, the same now becomes. jes the 2. Valid d. Unenforceable Rescissible ©. Void Voidable 4. The guardian of an insape person sells a house and lot belonging to the latter valued at 109,000 to & buyer for 224,000 with the approval af the court. the contracts varie 4d. Uneaforceable Reselssibie © Vou © Voidabie 5. In the following cases, the debtor Inges, the right to use the period in which case the oblaetion hemes sgumeuiately demandable. Choose ie eancetinn When. after the obligation Ieee the Gebtor “becomes ‘insolvent ‘but he sivas tollateral security or guaranty b. When he fails to furnish the collatera! security that he has promised © When the collateral 1s Impaired whether through his fault or by fortuitous avent 6. When the debtor attempt shscond ©. None of the above 6. $ sells to B an animal for P10,000. the contract ig: a. Valid Unentorceabe D. Rescissible © vee c) Vaiwable 7. The following are all deléy sources of contractual hiabiity éxcepd Deloy Histake Negligence &. Fraud . contravention of the tenor ofthe obligation 8. ‘The father oF in his absence the mother becemes liable for the damage that a minor con ney cies ak others and the liabity arses trons a eine D. Contracts Quasi-el 2. quasiccontracts WD 20 Page 10f10 + MULTIPLE CHOICE PROFESSIONAL REVIEW and TRAINING CENTER, Inc tne 122 ra City 82 2250040 * Cagayan de Ora City 08822 725150 CPA REVIEW BL.5018.OBLIGATION AND CONTRACTS MALVAR/J,ONG/T.LOP OCTOBER 20 faa the veer wight 9. v, Sh lune 15, 2000 obligated himself to C to sel the liter his house and otter One eee of P5,000,000 on condition that C passes the ¢ board examinations to he given in October 2000. cL aoerineN eel eens hoard crams, Osold the Reuse torT sane August 2000, In November 2000, C passed exams unexpectedly Vino hess betty ene | house and iat Assuine that ane tae ee thar warsecton wih the Resierton ey Cece her id they ane parses nah e BERT HOR fe the House ond lot been sald nght goct back to one es ee Shipeton: wor eanrecisa om ime wR Btreugh the eanchiog oe ong ac Avenue Thos a Get ight since Ic was sold to hin August, 2000 whereas the Condon fn wal conpleg oy someting ree ong Because of tha eotroversy beeen decide not to sels hou a et ores Comedt congue te 10. This mode of extinguishment occurs when’ a pers becomes both debtor and creditor of himself: a. Payment d. Detict -Condonation c. Novation Merger ThA, B, and © joi and severally barrowed from 80,000. The obtgation is elasetleg os Saint 3d. Delet & passive solidarity &. Quasi-d active solidanty 12, The following aré all factors vitiating consent, excep! Mistake d. Intimidation Negligence ©. Fraud © violence 13.D borrowed from C PS,000,000 promising to pa upon ‘the sale of his house and lot-at 123 Ri: Avenue, Manila. The obligation of(Q)ko 2. an obliaation with a period 5. an obligation with a potestatiye condition th fulfillment of which solely depends on the will the debtor and therefore void © C can collect only when 1D is able to sell th house and lot cnly the condition is nullified, but not th obligation tn which case C can collect even if th © house ond lot ws not sold 14.8, 8 and C borrowed from 7. W,X; Yeand Z P90,000 céme maturity detgcy con eallect Oe & a OI B. P30.000 . Kone ofthe above e projpes 1.0 binds hinge ta pay €'P30,000 when his mean Bermit him Lo do 50. Said obligation is: @ conditional obligation an obligation witiy a perio Bee MBB g.9 ty “A 218 BL.50iB J — Gisee ac mt, 002©. @ pure obligation 4. none of the above aes 6 17. Ds under obligation to pay C 500,000 on Decemsar 15, 2002. Before “due date, D wants to ena 500,000 but the later refuses to accept becouse she obligation is not yet due, Deeds 2. °D can compel C to accept payment because when an obligation is with a period, sad eewae when the benefit of the debtor only. >. C can refuse to accept payment Because when an obligation is with a period, the bencit ts ony en assigas all of the above the creditor C can refuse to accept’ because when an gbligation is with a period, said—neriod is Presumed to be for the benefit of Goth) debtor and creditor. 4. Correct answer not indicated, 18.0 is driver: of:a passenger bus which is owned and operated by. 0. While D is driving said bus, it met on accident through his: negligence where P, passenger, was injured. D is liable to P for damages which arises from: © crime y quasi-detict a. law b. quasi-contracts ©. contracts 19. Based on the same facts, O can be held Jiable for Gamages by P and obligation arises from 2. law d. deliet contracts © quasi-detict quasi-contracts 20. A mango tree in the land of O is réclining towards the foad. All of a sudden, without 3 storm or an Serthquake or even strong wind, the tree falls hitting frobatte ep nging to X causing 8 F20,000 damage, The liability of Oto X arises fram: a. Law J. b. Cantract © quasi-contract Detict Quasi-delict, On July 20,2003 the house was hit by a lighting and was destroyed.,in this case Foe validly demand payment from © on july 20, 2001 because the latier losses the right to make use of the period. upon the impairment of the collateral B.C cannot collect on July 20,2001 because in the nature of an obligation with 2 period tha debt con only become demandable upon the arrival of the period. © € can vatidiy demand payment from Don July 20,2001 Unless O gives another collateral equally satisfactory. 9. The obligation of D to C is extinguished because of the loss of the collateral. thraugh a forluitecs event 22. Strictly speaking, the following are special modes of Payment, except: & 2son en ago application af payment © payment by cession @- tender of payment and consignation 0 ee ep Page 20f 10 WOE DI, 99-8 23.8 ONAL:REVIEW and TRAINING CENTER, INC 3. MD WC red 33-6 KO 94-0 8.5 DS ga. 9 Www .prte.com ph 23. A representative of an absentee sells a house and | valued at P100,000 for onty 60,000. The contract is a Valid 4. Unenforceable Rescissible e. Void ~ Voidable 2. Rescissible Void b. Voidable ane of the above c. Unenforceable 24. Which of these contracts ao Subject to ratification 26.Based on the facts as-stated in the precedinc problem, if the right of choice belongs to C, then © now becomes liable far damages to C On the basis of the value of the cow or the carabad or the horse at the choice of C 27. Which of these contracts is consensual? a. Mutuum d. Deposit 5 Commodatum @. Mortgage Partnership 28.0 is the oviner of a car which was sold by S without authorization in favor of B. The contract between S and 8 in so far as O1s congaened a valid CB vrenorceaie B. Reselsibie void © Voidable 23.A, B and C borrowed P90,000 From X, Y and 2. X can hold liable 8 for: 2. 90,000 4. P20,000 30,000 ©. Correct answer not given P10,000 30.4, 8 and C, joint debtors in the amount of 90,000 in favor of X and Y, solidary creditors. When the obligation matures, how much can x collect from A? 790,000 in favor of X and Y, joint creditors. When the obligation matures, how much can ¥ collect from B? a. P90,000 d. “P18,000 b. P30,000 ©. None of the above P4s,000 32.A, B and C are jointly and severally indebted to KY and 2 in the amount of P90,000. the ocve obligation is: 2. Joint @ mixed solidarity b. passive solidarity ©. active solidarity None of the above 35: The principle that "No one shall be unjustly enriched Gp, Denefited ak the expense of another " is the base of 3.8 BL.501B34 38. 39. 40. Af. Contracts «, Quasi-contracts gd Deticts Quasi-delicts An obligation with a period: 2. D will pay C P1,000.00 x dies. B.D will pay € P1,000-00 when x dies of TB © D will pay CP1,000.00 when he fishes Course in Business Administration 4. None of the above his & B and C borrowed jointly and’ soverally fram x, ¥ and Z P90,000 payable on December 15, 2002. At the time of the transaction A was only 16 years old, while on August’ 19, 2001 X gave an extension of fine for C to pay on July 20,2004. On December Ls, 2002, how much can X collect Irom 83 &- P90,000 because the obligation 1s solicary ©. F60,000 because B can present as against X ti defense of minority on the part of A, but anly for 30,000, © 30,000 because B can present as against x the Gefense of minority on the part of A and the extension of time in favor of C amounting to 30,000 each, .P10,000 only because the obligation Joint will support C untit end of this with a. 8 suspensive condition b. a resolutory condition © an EX DIE period ¢. an IN TEM perioa year 1s on obligation A condition which, if imposed on an Jisregarded and’ will, therefore, immediately demandable: @. If X passes the CPS examinations b. IF X swims across the Pacific Ocean ©. IfX does not swim acrass the Pacific Ocean a. IX kills ¥ ligation, will be make the debt A, 8 and © obligated themselves to deliver to x Specific car worth P300,000. On due date, sai! cor se poroonlvered to X due: tothe fault of A causing a P9,000 damage to the former. In this case @ X can compel any of 4,8 and C to pay P309,000. be The obligation of A, 8 and C is presumed te be Joint and therefore, X cam compel A, B and € te gach deler 1/3 of the car plus damages of 3,000, © The obligation of A, 6 and ¢ is presumed to be Joint, but the action is converted into one ter damages where X can collect from A, 3 and ¢ P103,--- each, 4. The ebligation of A, 6 and C is presumed to be Joint but the action is converted into one for damages where X can collect trom A P109,000 and from 8 and C P100,000 cach © binds himself to. deliver to C Specific car. This is: @: An alternative obligation ». A facultative obligation © Both of (a) and (b) d. None of the above & specific jeep anc Insolvency of the debtor is required! in 2. Dation in payment b. Payment by cession © Tender of payment and consignation Application of payment orca ce SIM ETNAINING CENTER, INC. AL. Delivery of property in satisfaction of a debt inn is: 4. ADJUDICACION EN PAGO b. Payment by cession c. Consignation’ None of the above 42.D owes C P1,000.00 € tells D that he is willir forego collection if the latter will just give hin lape recorder, D consents and gives C the recorded. D's obligation 1s extinguished by: 8. Payment c. Confusion, b. Condonation d.. Compensation 43. When two persons in their own right, are debtors creditors of Gach other, there is a. Confusion © ’. condonation a. Novation compensation ‘4. When the characters, of debtor and creditor merged in the same person with respect to the s obligation, there is: a. Remission ©. Novation b. compensation d. None of the above 45. A, B and C jointly and severally obligated themsel te deliver to X a determinate car worth P6O0,000 duc date, because of B's fault, said car was Gelivered causing a P9,000 damage to x. 8 Insolvent, 2. X can collect from A, B and C P203,000 each, b. X can collect from A the sum of P&Q0,000 o because he is not the party at fault’ but ¢ recover reunbursement from C in the amount 309,000, © X can collect from © the whole of P609,000 a collect reimbursement fram A P200,000 only. 4“ X can collect from C'the whole amount P609,000 and collect reimbursement from A the amount of 304,500. “6: The delivery of a private document evidencing Credit, made voluntarily by the creditor to the clebte even before the debt is paid, extinguishes th obligation by: @ Express remission —_¢,- Compensation >. Implied remission d._Novation 42. Persona! novation: 2. Substitution oF debtor b. Subrogation of a third creditor ©. Goth of (a) and (b) d. None of the above Berson in the place of th “8. When @ third person of his own accord snd even wathout the knowledge of the original debtor assumes Che obligation with the consent of the creditor: a. Expromssion ¢._ Subrogation b. .Delegacion d. Real novation 49.0 owes C. Later, the parties agreed that instead of D Paying C, he will just pay x. This is an instance of. i GRpromission —“c.Convertional subrogation >. Belegacion 4. Legal subrogation 30. B borrowed from € P100,000 with an agreement that upon foilure to pay on due date, a penalty of 20% Shell be imposed. On due date, the P100,000 wos noe Paid. C can collect from D: 2 P100,000 only b. P100,000 plus penalty © P200,000 plus penalty plus interest at 12% SBP St 380 35.0 40.5 Ask AeA 480 ago aro Ae BARS at. A ess Page 3 of 1 www.prtc.com. ph 5 BL.501BPROFESSIONAL REVIEW and TRAINING CENTER, INC. d. P100,000 - plus. interest plus damages penalty plus 51. In the following cases, interest or damages can be collected by the creditor from the debtar in addition to the penalty agreed upon. “ a. If there is a stipulation to that effect b. If the debtor defauits in the payment of the penalty. ¢. Where the debtor commits fraud in the fulfillment of the obligation, d. All of the above e. None of a, b, andc 52.When a creditor who ts preferred, even’ without there is: a. Real novation .¢. Delegacion . Expromission d. Legal subrogation pays another creditor the debtor's knowledge, 53.0 is indebted to C in the amount of P500,000. By dacion en pago D conveyed to C the ownership of a car with an agreed appraised value of 700,000, a. The obligation of D to .¢ is automatically extinguished, b. The obligation of D to C is not extinguished because they agreed to sell the car Irom which the payment of P500,000 is to be derived c. The obligation of D to C 1s automatically extinguished and on top of that C has to pay D 200,000. 4. Correct answer not indicated 54. DO UT FACIAS: a. I give that you give b. Igive that you make c. I make that you give d. Amake that you make 55. D is indebted to Cin the amount’of 2,000,000 and to secure the payment of which D mortgaged his house and lot. Later on, C became indebted to D in the amount of 500,000 which is now due and demandable. T, a third person,-without the consent of D made payment to C in the amount of P2,000,000. On due date: @& T can collect from 0 reimbursement of 2,000,000 as this is the amount that he paid te c. b, By T's payment to C, he became subragated into all the rights of C as-against D and therefore, if D cannot pay T, T can foreciose on the mortgage of the house and lot, ©. T can foreclose on the mortgage but can recover only P1,500,000 from the proceeds, d. T cannot foreclose on the mortgage bul can recover only P1,560,000.as reimbursement (ror D up to the extent that D was benefited by T's payment to C. a The mere fiberality of the benefactor is the cause in: 2. Onerous contract b. Remunetory contract ¢. Contract of pure beneficence d. All of the above 57. is indebted to C, an insane person, in the amount of P1,000,000. On duc date, D paid io C the 1,000,000, As a result, C was able to deposit in the bank P400,000; used P200,000 for a tour af Europe: loaned to X P100,000 which was net paid; invested 200,000 in the stock exchange where he last 1/2 af bis investment end lost P100,000 in the casino. Bis Still indebted to C the insane or incapacitated person Shs OG GY BCE 1 SFB. C4 C OD LH FONE eee coe he S ; Page 4 of 58. 59. 60. 61. 62 64 @ 1,000,000 because, D made payment to an incapacitated person. b, P300,000 since C anyway actually benefited from 400,000 depositec in the bank; 200,000 spent on his European tour, P100,000 from his investment in the stack exchange. ©. 200,000 because C. derived benefit from 400,000 bank deposit; 200,000 European tour; and the P200,000 investment in the stock exchange. 4. P100,000 because C derived benefit from 400,000 bank deposit; P200,000 European tour; 200,000 investment in stock exchange and P100,000 lost in gambling since in gambling he could Rave wan. D is under obligation to deliver to C a white race horse. Without fault on the part of D and before he has incurred in delay, the white race horse intended for delivery died, a. The obligation of D is extinguished. b. The obligation of D is not extinguished because the object of the contract “white race horse” is generic and the legal maxim is genus never perishes applies, €. The obligation of D is extinguished because in law, white race horse is determinate enough. d. Correct answer not given Factor vitiating consent: 2. MORA, ¢. Dolo causante b. CULPA @. Dolo incidente A voidable contract: 2. Contract agreed to in state of drunkenness b. Contract agreed to during hypnotic spell, €. Contract where consent is given through undue influence d. All of the above D is under obligation to deliver to C a 2000 model Yoyota Corolla car with engine number 9876543 on or before July 20, 2000. On August 19, 2000 said car was destroyed by an earthquake. 2. The obligation of D to deliver the Toyota Corolla car is extinguished because it was lost by a fortuitous event before D incurred in delay since Chas not made @ demand on him. b, The obligation of D is not extinguished because he is clearly in delay when after July 20, 2000 the Toyota Corolla car was not delivered to C The obligation of D is not extinguished because the object is generic. d. Correct answer not indicated, The cast defective contract a. Voidable contract b. Rescissible canteact c. Unenforceable contract 6. Void contract An oral sale of land for P500,000. a. Rescissible ¢. Unenforceable b. Voidable ¢. Void D is indebted to C for 5,000 sacks of rice while C later fen became indebted to D also for the payment of 5,000 sacks of rice. Both items are due and demandable, except that T claims that the rice loaned by D to C was stolen from his bodega and such claim has been transmitted to D and C. BL.501B°G5. These novations take place 66. 67, 68. 69. a. Theré is compensation that both debts consists in consumables of the same kind which are both due and D and C are bound to each other in a Principal manner. 5. There is no legal compensation. here becavisir there is @ controversy or right of retention by @ third person and communicated to B and ¢ © There is compensation because while Tis claiming that D stole 5,000 sacks of rice from him, there is no such claim as against C. The conclusions and reasoning in b and ¢ are correct, automaticaly or by 9peration of law. Choose the excaption @ Where a creditor pays another creuliter wito 1s preferred, 8. Where a third-person who has no interest in the Obligation makes payment with the consent of the debtor. ©. Where a third person who has an inter obligation makes payment to the creditor, 9. None of the above: in the D is under obligation to deliver to C a Tayora Altis with engine no. 1234567. When D was on the way to Geliver the car, it was destroyed at a tune when O was not yet in delay. The lav presumes tha the loss is due to =| 8. the defective nature of the car b. A fortuitous event. ©. default on the pat of D Gd. the fault or.negligence of the debtor or D One of the parties to a contract is ant a. Rescissble ated b. Voidable ©. Unenforceable Voie D owes C 2,000,000. Thea € and T, and third Berson, agree that the latter will substitute D in the Payment of the debt, Thereafter, T became insolvent aC €an revive his action to compel O to pay 5. C can revive his action against D provided that D did not know of T's insolvency or that T's insolvency is of public or common knovledae. & C cannot revive his action against 0 because the faw does nat allow this in expromission: 4. Correct answer not indicated An agreement in restraint of tracie. a. Perfectly valid b. Voidabie © Unenfarceable 4. Void 70.5 in Manita offered to sell to 8 in Cebu his house and lot for P10,000,000 giving the latter 60 devs witing which to decide, 8 accepted the offer of § by a letter While the lettor was 90 its way to Manila, 8 changed bis mind and sent to § another letter withdrawing he acceptance 2 days after his first letter © B can withdraw the acceptance because ¢. B con withdraw the we Pag 2. B cannot anymore withdraw the first letter of acceptance. B cannot anymore withdraw the letter of acceptance specially if S has already received the same, withdrawal was made before S receivind his fest letter of acceptance. acceptance even if S has already received his lettar of acceptance 2.GeD VES Ufc e9. ie Sof io www. prte.ci Bie WA 32.0 Ime gy.e mph mee ect gonna ANG TRAINING CENTER, INC. 71.5 offered to sell his house and tot to B for P5,0¢ giving to him an option of 60 days within wh decide whether or not to. buy. After only 15 d: met T who offered.to buy the same house and | 8,000,000. S then notified 8 of the withdran the option and proceeded to sell to T. B fil action for damages against S, a. B csnnat recover damages from C becaus Option is without consideration as somethin or promised &. B can recover damages [rom S because the violated the option given to the former. ©. Bcan recover damages from S if 8 gave S ¢ money which will result in a perfected contr sale. 4. Correct answer not indicated 72. F owes C P10,000,009. F dies leaving to the only S a house and lot valued at P7,000,000. 5 volun Pays P10,000,000. Decide: a. In the first place, S is under no obligation tc C because the P10,000,000 is not his debt. b. S is obligated to pay P10,000,000 becaus: becomes liable for the debts of his predece: in-interest © C cannot be competied to return the exces 3,000,000 because it 1s the natural obligati¢ an heir to pay the debts of his predecesso interest if S voluntarity paid P10,000,000. af S paid C 10,000,000 ‘the’ excess P3,000,000 should ‘be ‘the subject of agreement between S and.C because it is un to 'S that he should lose his own money 3,000,000, 73.5 orally sold to B his house and lot for PS,000, where B snitially paid P50,000. Aer paying balance 8 now seeks to register the lot in his na but the Register of Deeds refuses to do so. In | case: a. The transaction involving the oral sale of a ho and lot is null end void, b. The contract between S and Bis unenforcea under the Statute of Freud © The oral sale of the house and tot althou unenforceable under the Statute of Fraud t been ratified by the receipt of the considerat and, therefore, B can ‘compel S to execute t Geed of sale in'a public document. If S does not want to execute the* pub document, he can rescind or cancel 1 agreement with 8. 74. An oral contract of guaranty 2. Perfectly valid c. Unenforcedble b. Voidabie a Void 75.F disappeared without his whereabouts having bec Keown sometime in 1994. Whereupon in 1996, W, fh wife, Sold his house and tot worth P10,000,000 ft only 7,000,000 in favor of Tin order to support th family. In 1988, F resurfaced and began steying wit his family. In 2003, F decided to file an action t rescind the contract with T. In this case a. The contract of W with T is valid and, therefore rescission will not be available as a remedy bo IF F can return the P7,000,000 to T and th house and lot has not been sold to a buyer i 990 faith, ne can validly ask for rescigsion x a76.S offered to B the sale of his house Even if F can retuien the P7,000,000 and the house and lot hes not been sold to a buyer in good faith, rescission will not lie because more than 4 years’had elapsed from the reappearance and, therefore, his right to rescind has already Prescribed. 4d. Correct remedy not indicated. and tot for 10,000,000 by means of a letter. AL the same time, & offered to buy from S the same house and lot by way Of telegram for P10,000,000 also. B has received the offer of S and $ has also received the telegram of B Is there @ perfected contract of sale between § and 8? @ No, because what concurrence of offer Crisscrossing of offers occurred was not a end acceptance but a b. Yes, because the essential elements are all present, namely: “consent, —cbject. ancl consideration, © No, because the house and lot being an immovable to perfect the contract it must be in a public document. Correct answer not given. S offered to sell to B his house and tot for P10,000,000. In order to pressure G inta buying said house and lot, T, @ very good friend of 5, threatened 8 with death as‘a result of which B accepted the offer of S. Tt turns out now that the market value of the house and fot is 15,000,000, Is the contract of § and B valid? The contract is valid since it is very clear that S did not apply the intimidation b. The contract’ is voidable because the consent given by Bis. anyway vitiated even if the \imidation was employed by a third person, The issue of the contract being voidable is not relevant because ® will not have the conteact avoidable because it is actually favorable to him, It is not B but'S or T who can file the action for annulment. . S sometime in 1996 sold to 8 a house and lot where the former committed fraud. The deed of sale which was in 3 public document was registered with the Register of Deeds in 1997. In 1999, the fraud was discovered by the heirs of 8. Under the Law, the action to annul a contract based on fraud must be filed within four (4) years fram: 1996 the date of the contract b, 1997 the date of registration with the Register of Deeds, ©. 1999 the date the fraud was discovered, 4G, The action to annul a contract based on fraud is Rot subject to prescription, Valentina orally. promised to many Pedro consequence of which the latter contracted the Manila Cathedral as the venue of the marriage, the whole of the Fiesta Pavilion of the Manila Hotel the bridal gown to be made by Pitoy Moreno, spending all in all about P4,000,000, On.the date of the marriage, Valentina did not appear: a. Pedro can legally compel Valentina to marry him. b. Pedro cannot compel Valentina to pay damages because the mutual promise ty marry was oral While Pedro cannot compel Valenuina to marry him, he can collect from Valentina damages. d. Pedra can neither collect damages from Valentina nor compel her to marry him. PROFESSIONAL REVIEW and TRAINING CENTER, INC 80. 81. 82 84 8s. 87, 88, MA 23:8 SEB Pie eS 8.9 Bue Bee Page 6 of 10 www.prtc.com.ah S and 6 agreed on the sale of a certain amount ¢ opium for the total price of P1,000,000. Which ¢ these statements is correct? 2. IFS had delivered the opium, and B does not pa him, he cannot ask for the return of the opium. ». If B had paid the P2,000,000 and $ does ‘no deliver the opium, he cannot recover the pric aid ‘The opium and the consideration of P1,000,00 shall be confiscated by the government. d. Ail of the above. D is indebted to C for the amount of P100,000 whic! is guaranteed by G. D made to Ca partial payment o P30,000. T, without the consent of O, paid. ¢ 100,000 where the prevailing rate of interest is 42%. T can recover from D a, P100,000 without interest b. P100,000 with interest ¢. P70,000 with interest 6. P70,000 without interest Which of these is a formal contract? a. Donation of real property b. A partnership where there is contributed real property Both of (a) and (b) None of (a) and (b) Which of these is proof of the perfection of a contract of sale? a. Option c. Earnest money b. Option money d. All of them The characteristic of a contract to the effect that 2 Contract binds not only the contracting parties, but also the heirs or assigns is called: ‘Autonomy of contracts Obligatory force of contracts Binding effects of contracts Relativity of contracts Consensuality of contracts, This is a reat contract: 2. Deposit b. Pledge Mutu 4. Antichresis e. “All of them Strictly speaking, this is not a mode of special payment: a. Dacion en pago b. Payment by cession ©. Tender of payment and consignation 4. Application of payment Poyment by the debtor to’a third person instead of the creditor extinguishes the obligation if such payment redounded to the benefit of the latter which must be proven, except 4. If the creditor ratifies the payinent b. If after payment, the third person acquires the rights of the creditor ©. If creditor is in estoppel to. question the authority of the third person d. All of the above © agreed to transfer to I, verbally, @ residential lot in consideration of a service or benefit already rendered by the latter in favor of the former. Which of these is correct? a The agreement being’ verbal involving reat Property is unenforceable and theretore cannot be sued upon in court By-D THE, Hg? wgeR REVIEW and TRAINING CENTER, INC 89. 90. on. 92, 93, 94. In payment by b. The verbal agreement is enforceable bucause it is fot covered by the Statute of Fraud. © The law requires the agreement to be in writing at least since it involves real property he transaction is covered hy"the Statute of Freud because it involves the sale ul rea! Property or any interest therein A deaf-mute who knows how to write enters into a tre ect with an Insolvent person after his discharge, the contract is: a. Valid d. Unenforceable b. Rescissible © Void © Voidabie This results in the ratification of a contract violative af the Statute of Fraud 2. Receipt of benefits under the agreement b. Failure to abject to the presentation of evidence Broving the oral agreement © Both (a) and.(b) None of (a) and (b} Which of these is a correct statement? & Whenever in.an obligation a period 1s designated, it Is presumed ‘to be for the benclit of bath debtor and creditor. b. Anin diem period has a resolutory effect: © From the time debtor attempts to abscend, he loses the fight to-make use of the period 4. All of the above ‘This is not always an essential etement of contract 2. Consent cc. Cause b. Object d. Form Which of these is:not subject to reformation? 2 Simple donations inter vives where 10 conditions are imposed, b. Last wills and testaments © Contract where the real agreement 1s void. 4. Where the fraud or mistake prev: 2 meeting of the minds, @. All of the above nl in @ Facultative ‘obligation, which of these is not a correct statement? 2. Tf the principal is last without the fault on the part of the debtor and before he incurs in delay, the obligation is extinguished I the principal is lost through the fault of the debtor, he becomes liable for damages. That the debtor can avoid having to pay damages to. the creditor by delivering the substitute G-The right to.give the substitute by law belongs to the creditor, cession, which of these statements is Not correct? 2. There is one debtor and severat creditors. D. It is more advantageous to the debtor than insolvency. & The debtor is in a state of insolvency, more or less, @ The obligations of the debtor are not automatically extinguished upan the cession of the assets and properties, 96. Which of the following contracts is not void ab initio? 2 The contract. where the object is beyond the commerce of man b «. a, e The contract whose cause, —_obje: consideration is against the law, morals customs or public order, The contract which is relatively simula fictitious, ‘The contract where the intention of the + to the object thereof cannat be ascertained None of the above. 27. Which of these obligation is realin character? a b, « 98.4 it a b. 4. all of them ©. None of the abov: to paint a house to repair a car to write a book wife is under obligation to support her.husban arises from Law contract quasi-contract 9. quasi-delict ©. None of the abov: Pacis, terms or stipulations ‘provided they arc contrary to law, oF public order, morals, good customs, The above is public 2 description 0} characteristic of a contract known as: a 100. 101 102, 103, 108, consensuality of contracts building effect of contracts autonomy of contracts obligatory force af contracts relativity af contracts D bound himself to deliver to C jeep and a car, obligation is a. alternative 4. simple. b. facultative ©. complex © Joint The diligence of a good “father of a family Fequired of a person obliged to give simply meat 2. inferior diligence; “¢.. superior diligence; ©. averaye diligence; d. None of the above ‘This is delay in duing - 8. Mora solvendi ex re; b. Mora solvendi ex person © Mora accipiendi: d. compensatio marae Statement 1: The law does not allow waiver of action for future fraud. Statement 2: Damages arising from fraud canr be reduced or mitigated by the courts unil damages arising from negligence: especially if the is contributory negligence. a. Goth statements are true. b. Both statements are false. C. Statement 1 is true , but statement 2 is false. 1. Statement 1 is false, but statement 2 is trus D obligates himself to pay C P100,000 on Aug 39, 2003. The benefit of the period belongs to - a. Donly; c. Both C and 0; b. Conly: d. Neither c nor‘D, D obligates himseir August 19, 2003 to- 8. Donly; b. Conly to pay C P100,000 on or befor The benefit of the period belong ©. Both C and D; J. Neither C nor D. in which of these cases is the solidery debtor whe paid not entitled to recover: reimbursement. from his co-debtor? a te. 32-A du-¢ Ny gad 93-8 44. WPM We IA Re IN-F BiB 193 petal Page ? of 10 Www. prtc.com.oh ze BL.501BPROFESSIONAL REVIEW and TRAINING CENTER, INC a. If when the debtor pai, the debt has already prescribed; b. If when the debtor. paid, the debt has already become illegal; If the debtor paid even without 8 demand trom any of the solidary creditors; 9. Botha and b; e. Allofa, bandc 407. The ‘general rule is that where a penai clause is Provided for, Such penal-clause or penalty already takes the place of the payment of interest or indemnity for damages, Which of these is an exception to the rule? 2. Where there is an stipulation to the effect, b. When the debtor defaults in the payment of the Penalty, © When the debtor commits fraud in the fulfillment of the obligation, d. All of the above. 108. In which of the case ‘problems is the given conciusion correct? 2. D is, under ‘obligation to deliver to C a grey horse on or before August 19, 2003. On due Gate, while D was on his way to deliver the said grey horse.to C, it was struck by a lighting and the horse died. The obligation of © to deliver a grey horse to C is not extinguished under the principle of genus nunquam perit b. Fis the father of S and is indebted to C in the amount of P15,000,000. F died leaving an estate valued at P10,000,000 only. Under the law S, the heir, is liable to pay C P.19,000,000, only and not °15,000,000. © Dis indebted to C for P200,000 znd Lo secure the payment of which delivered to the latter by way of pledge his diamond ring. C returned to © the diamond ring by way of candanation. 0 1s, still indebted to C for the payment of P200,000 under the principle that the condonation ot accessory obligation does not carry with it the condonation of the principal condonation d. Both a and b, &. Allofa, b, and c 109. Which of these modes of special payment 15 governed by the law of sales? Dacion en pago; Payment by cession; ‘Tender of payment and con: Application of payment; None of the above 410. This is exception to legal. compensation - 8 Where . one of the debts arises commodatum; 5. Where one of the debts arises from depasitum; © Where one of ‘the debts arises support by gratuitous title; G. Where one of the debts arises from a civit liability on-crime; ©. All of the above from In one of these cases there is no novation, Whieh is ie a. Where 0 's'indebtéd to C in a promissory note for P200,000 and another one is executed extending the time of. payment; », Where Dis indented toe in n promissory nate for P200,000' and. another une encenes shortening the time of pavereree ©. Where D is indebted to Cand they agreed that “Lillsubstiute B in the payment ore vox 26 Ae et Page 8 of 10 Oe Ste wWW.prtc.corm.ph d. Where D is indebted’ to C and C and T, person, agreed that the former shall substitut Din the payment of the debt. 112. 0 is under obligation to deliver to C a chempio calibre racehorse by the name of WINDBLOWN o May 15, 2003. While D was on his way to delive WINDBLOWN on june 13, 2003, the racehors died. Choose the conciusion with the corre reasoning - & D is liable for damages because the objec WINDBLOWN is generic; b. D is liable because at the time of the loss o WINDBLOWN, he was already in delay; cD is not liable because all of the factor affecting loss of the thing due’ are present i the case; 9. Os liable for damages because WINDBLOW! Gied while in his possession and there is ne indication in the problem that it was on the Occasion of a storm, flood, earthquake or othe calamity. The presumption, therefore, is tha WINOBLOWN was lost through the fault of D. 113. This kind of compensation takes place by operatior of law or automatically even without the knowledge or consent of the parties - 2. Voluntary campensation; b. Judicial compensation or set-off; c. Legal compensation; d. None of the above 114, Strictly speaking, which of those should not anymore be considered an innominate contract? a. Do ut des or I give that you give; b. Do ut facias or I give that you make; ¢. Facio ut des or I make that you give; ©. Facio ut facias or I make that you make. 115. Statement 1: § orally sold to B a piece of land 1,000,000 where the latter made a down payment Of 500,000 to the former, 8 can compel S to execute @ public document containing the sale. Statement 2: In reformation of contracts, where the mistake, fraud or accident prevented a meeting of the minds, the remedy remains to be reformation and not annulment. a. Both statements are true. b. Both statements are false. €. Statement 1 is true, but statement 2 is false. d. Statement 1 is false, but statement 2 is true. 116. Which of these-constitutes fraud? The usual exaggeration in trade if the other party had an opportunity to know the facts. ‘An expression of apinian which did not turn out to be true if made by an expert and the other Party relied an it, ©. Failure to disclose facts when there is no duty to reveal them d._A misrepresentation made in good faith, e. Both b and ¢ a. 117, This is not always an essential element of a contract - a. Form; 0. Consideration; b. Consent; ¢. None of the above © Object; 118. M is minor who owns a house and lot valued at P1,000,000. G is the guardian who sold the house and lot to B for only P600,000 but with the approval of the court. The contract between G and © [MB tak (be, ‘BL.501B2. Valig; d. Unenforceanie; b. Rescissible: fe. Void © Voidable; 119. S and 8 entered into a contract of sale of a piece of land embodied in a:public document on March 14, 2002. On July 20,2002, the said public siocument was registered with the Register of Deeds. (in December 15, 2002, B discavered that he was defrauded by'S. The prescriptive period for the Bling of the action for annulment shall ve countes, 2. Within four (4) years tram March 14, 9003 ar the date of the contract, b. Within four (4) years from July 20, 2002 date of registration with the rice Registration of Deeds: © Within Four (4) yeers from December 15, 2002 or the date of actual aiscavery of the fréud by 8: 4. Correct answer not given. or the. of the 120. 0 binds himself to pay C P30,000 as soon as the PNB approves his application for a loan. Said obligation is - 8. A condition obligation b. An obligation witty a period ©. A pure obligation 4. A joint obligation 121 D Is indebted to C in the amount of PS00,000. éy dacion en pago, D conveyed to © the awiershin oF his car. Afterwards, i was ascertained that the cor has a value of Pa40d,000 only, & The obligation ‘of D to C in the ammount of F300,000 is automatically extinguished even if the actual value of the car-is only 400,900. b. D would still be liable for the balance of 100,000 in favor of C © C can return to D the car and conipel mim to pay P500,000, @. Dacion en pago does not apply because the Subject matter is @ car and not an immovable property, 222. Mi, minor, owns a house and lot valuod at P2,000,000 and G is’ his guardian , cold. sac) pouse and lot to 8, a capacitated person, tne £600,000 in a private writing. The contract between Mand Bis: a Valid d. Unenforceabie b. Rescissibie &. Void ©. Voidable 123. D owes C 3,000,000 which is collateralized by o Bee sa8e on the house and lot of D. Subsequentiy, borrowed P5,000,000 from & and also morten the same house nd.ot in favor of the tation ie Pays C P3,000,000, there will arise = 2. Conventional subrogation b. Legal subrogation ©. Real novation d. Payment by-a third person 124. In a written contract of sale between § and 6 the SUE intention of the parties was not incorporateg Aue to the mistake of S but where B is money pShuime that there was a meeting of the ang between § and 8. Who can bring the scuign Me reformation? a. Bonly c b. Sonly Both B and § 4. Neither B nor S Bay ! A taie Page 9 of 10 me EN: 9B Pee neg, ead 125. in a written contract the true intention ¢ parties was not reflected therein through the committed by ane of them, which fraud prev @ meeting of the minds. ‘The applicable re would be = a. Reformation of the contract ). Resolution of the obligation € Annulment of the contract 9. A petition for the declaration of nullity « contract 126. D owes C 1,000,000. T, a third person, a with C that he will’ replace D in the payment « Gebt. The transaction is one of « a. Expromission b. Delegacion © Conventional subrogation Legal subrogation 127. S defrauded B in making the latter believe tha ring he is selling is gold and diamond when, in it Is copper and glass. On the other hanc defrauded $ in paying him 200,000 in Philippine currency. Whieh of these statement correct? @ S can go to court for the annulment of Contract so that the ring will be returne him, b. B can go to court so that his fake money wil restored to him. © Neither S nor B can go to court since they both guilty of Frauc 4. All the statements are not correct. 128. The following agreements are covered by Statute of Fraud. Choose the exception An oral agreement which by its terms is not be performed within one year from the mak thereof. b. An oral special promise to answer for the de Gefault or miscarriage of another, © An oral agreement in consideration marriage, An oral contract of partnership where 1 Contribution im money or personal proper amounts to P3,000 or more. ©. None of the above 129. In which of these cases will the Statute of Fra ot apply? 2 An oral mutual promise to marry, not to comp Marriage but only to recover damages, b. © orally conveys to.L a piece of land f benefits or services already rendered, © An oral contract’ of lease of real property f twelve months, An oral contract of tease involving @ car for years. ©. Allof the above. 130. D owes C P100,000. T, a third person, with th passant of D and C pays C.P50,000. On due date, has P50,000 and no other assets. In this case ~ 2. Tull have @ preference over the P50,000 &. C will have a preference over the PS0,000 a Provided by law. © Tard © will just share proportionately the 50,900 oF D. OF the P50,000 only remaining asset of 0, 7 fel Set P1S,000 and C will get P35,000 because of C being the original creditor.431, 133, Bee (32g laze ‘Page Delay or default on the part known as - a. Mora solvendi ex:re b. Mora solvendi ex persona Mora accipiendi d. Compensatio morae of the creditor is Delay or default on the part of the obligor in giving is known as - a. Mora solvendi ex re ©. Mora soivendi ex persona c. Mora accipiendi 4. Compensatio morac This kind of damage is’ awarded for phy suffering, metal anguish, seriaus anxiety, wounded feeling, moral shack, social humiliation and the like Actual or compensatory damage Moral damage Nominal damage temperate damage Gy [te Ie 10 of 10 AWWW. Drtc.com.oh 134 136. This damage consists of a small amount but | awarded to vindicate a wrong or to redress grievance, Actual or compensatory damage Moral damage Nominal damage Temperate damage Exemplary damage panon This damage consists of a small amount but | awarded to vindicate a wrong or to redress grievance. 2. Actual or compensatory damage ’. Moral damage ©. Nominaf damage d. Temperate damage Sue diligence in the selection or supervision ¢ employees is defence available in - a. Culpa contractual b. Culpa aquiliana ©. Both culpa contractual and culpa aquiliana 6. neither culpa contractual nor culpa :aquiliana BL.501B—Since 1977 BUSINESS LAW BL.501B.OBLIGATIONS AND CONTRACTS ue D C2 8 Page 1 of 5 PROFESSIONAL REVIEW and TRAINING CENTER, Inc. * Hania 7539344/7347903 * Cebu Cy 032 2557777 LOC 122 + Davao ity 082 2250049 * Cagayan de Oro City 06822 725150 CPA REVIEW MALVAR/J.ONG/T. LOPEZ OCTOBER 2008 COMPILATION OF CPA BOARD EXAM (May 1983 - May 1998) CONTRACTS These persons are bound by contracts. (Phil CPA, 85- 2; 88-2) 2, Contracting parties, Assigns b. Heirs d. All of them, Eianne signed a. promissory: note in favor of Flor Promising to pay P10,000 30 days after sight. Who can sue on this note and enforce the obligation? (Phil CPA, 93-1) = 2, Both Eianne and Flor b. Only Efanne Only Flor d. Neither Elanne nor Flor Requisites of @ valid object or subject matter: CPA, 85-2) a. Must be determinate or definite as to its kind b. Must be possible c. Botha and b d. None of them (Phil Requisites of a valid cause: (Phil CPA, 85-2) a. Tt must be lawful ¢. It must be real b. It must be true ¢. All of them Essential requisites of a contract: (Phil CPA, 86-2) a. . Consent c. Subject b. Cause 4, All of these When there is concurrence of the offer and acceptance, there is: (Phil CPA, 86-2) a. Payment ©. Acceptance b. Consent 4. Revocation Which. of the following is\ nota rule in the interpretation of contracts? (Phil CPA, 87-1) 2. If some stipulation of any contract should admit Of several’ meanings, it shall be understood as bearing that import which is most adequate to render the contracts effectual. / Words which may have different significations shall be understood in that which is most in keeping with the nature and object of the contract.” ©, In order to judge’ the intention of the contracting Parties, their contemporaneous and subsequent acts shall be principally considered, 4. Although the cause is not stated in the contract, it is presumed that it exists and is lawful, unless the debtor proves the contrary. Contracts are effective and binding only between the parties, their assigns and their heirs. Three of the following enumeratidns are exceptions as provided by law. Which doeg not} belong to the exception? (Phil CPA, 87-1) a. Where there is a stipulation in favor of a third party b. Where one of the thereafter a suit contract, © Where the obligations arising from contract are fot transmissible by their nature.” Parties to the contract dies and is filed on the basis of the ye pA ia:D www.prtc.com.ph 4.8 d. Where the obligations arising from contract ar ‘ot transmissible by stipulation or by provision c taw,/ 9. A wrote a letter to B wherein A offered to self a piec of land to B for 200,000. B signified his desire t buy the land. In A's letter, B was given a period o two (2) months within’ which» to produce th 200,000. After 45 days, A told B that price of th land is now P250,000. Can\Bg compel A to accept th 200,000 first offered by A and execute the deed o sale? (Phil CPA, 88-1) Yes, because there was actual meeting of the minds of the parties. b. No, for B did not signify his acceptance of A‘ offer. ©. Yes, because A is already estopped by his signed letter: Yes, because the period of two (2) months has not expired, 10. Mr, Santos offered to sell his land to Mr, Caima for 100,000. Mr. Calma accepted the offer and paid Mr. Santos P100,000and Mr. Santos delivered the owner's duplicate of the Transfer Certificate of Title of the land, Mr. Calma wishes.to register the land in his. name but the Register of Deeds asked Mr. Calma for the Deed of Sale. What can Mr, Calma do? (Phil CPA, 88-2) 2, Mr. Calma cannot compel Mr: Santos to return the payment because the contract is not enforceable. , b. Mr. Caima may sue Mr. Santos to return the price under the legal maxim "No one may enrich himself at the expense of another.” © Mr, Calma may compel Mr, Santos to execute the Deed of Sale because the contract Is valid. a: Mr. Calma may occupy and use the land as a buyer in good faith. 11. Mrs. Gomez sold and delivered her diamond ring to Mrs. Pangan. It was agreed upon-that after ten (10) days Mrs. Pangan will name and fix the price. On the tenth (10) day, Mrs. Pangan called up by telephone Mrs. Gomez and stated the price at P10,000. Mrs. Gomez agreed. Is the sale perfected? (Phil CPA, 83. 2) a. Yes. The price stated and named by one of the contracting parties was accepted by the other. b. No. At the time of the sale the price was not fixed. No. The price was left to the discretion of one of the parties, @. No. At the time of the sale the price is not known 12. Mr. Reyes and Mr. Vitug are good friends. Mr. Reyes Sold and delivered his car to Mr. Vitug. It was agreed 2nd understood that on Sunday Mr. Reyes will name and fix the price of the car. Sunday came. Mr, Reyes celled Mr. Vitug by telephone and stated and fixed the price at P150,000. Is the sale perfected? (Phil CPA, 89-1) @ Yes. The price was stated and fixed on the date agreed upon, BL.501B13, 14 15, 7; ©. No. The price was-left to. the discretion of the seller. ©. No. At the time of the sale, the price is not fixed. d. No. The price fixed by the Seller was not accepted by the buyer. Mr. Guzman sold his owner type jeep to Mr. Montano for P100,000. There was no date fixed for the performance of the obligation of Mr, Guzman and Mr Montano. The obligation of Mr. Guzman is: (Phil CPA, 89-1) 3. To deliver the jeep immediately as there is 3 perfected contract. b. To wait for Mr. Montano to pay P100,000 and deliver the jeep, ©. To rescind the contract because no time or date is fixed for the performance of the respective obligations. d. To deliver the jeep after Mr. Montano demands for the delivery of the jeep. Mr. Gamboa sold his car for P200,000 to Mr. Ramos, There was no fixed date for the performance of the obligations of both’ parties. The obligation of Mr. Gamboa as vendor is: (Phil CPA, 97-2) 2. To wait for Mr. Ramos to pay P200,000 and deliver the car. b. To deliver the car immediately as this is 3 perfected contract. To deliver the car after mr, its delivery, 4. To rescind the contract because no time or date is fixed “for. the performance of their respective obligations, Ramos demands far P.A.U Sold to R.D.E the former’s car.on April 1, 1992 for P300,000. P.A.U. promised to deliver the car on April 15, 1992 but 'A.D.E. did not make any promise ‘as to when to pay. (Phil CPA, $2-1) a P.A.U. on April 5, 1992 can demand payment from R.0.6. because the obligation is not subject to any condition, b. R.D.€. will be obliged. to pay only at or after delivery, ©. A.A.U. cannot demand payment until he delivers the cer, d. R.D.E. can compel P.AU, to deliver the car before April 15, 1892 upon payment of the selling price. X sold his car to Y for P50,000. No date was fixed for the performance of the obligations of the seller anc the buyer. The obligation of X is: (Phil CPA, 85-2) a. To deliver the car immediately because the sale is a perfected contract. b. To deliver the car only after Y writes to x demanding the delivery of the car. ¢. To deliver the car after Y pays X the PS0,000. d. To rescind the contract because there is no time fixed for the delivery Mr. Santos sold his car to Mr. Garcia for P159,000. No date is fixed by the partias for the performance of their respective obligations, The obligation of Mr. Santos is: (Phil CPA, 85-1) 2, To deliver the car immediately as there is a perfected contract. b. To deliver the car upon the payment by Mr. Garcia of P150,000. ¢. To rescind the contract since there is no time fixed for the delivery and payment of the car. G. To deliver the car within a reasonable time after the demand of Mr. Garcia to deliver. BSA [sb wie 2B eA tye age 2 of 5 18 19, 20. 24. 22. 23. 25. de. Mr. Burgos sold a parcel of land to Mr. Javier for P200,000. Mr. Burgos delivered the transfer Certificate of Title of the land td Mr. Javier. Later, Mr, Javier wanted to registers the land to his name and he needed 2 Deed of Sale. What can Mr. Javier do? (Phil CPA, 89-1) a. Mr. Javier ‘can compel Mr. Burgos to execute Deed of Sale b. Mr. Javier cannot compel Mr, Burgos to refund the 200,000 because the contract is not enforceable, © Mr. Javier can sue Mr. Burges for enriching himself at the expense of another. . Mr. Javier can posses and utilized the land as a buyer in good faith. Three (3) of the following may be valid objects of a contract, except: (Phil CPA, 89-2) 2. All that are within the commerce of man. ». All services which are not contrary to law. ¢. Impossible things or services d. All rights that are transmissible. Three of the following are option money. Which is the earnest money? (Phil CPA, 89-2) ty dara fenponech 2. Given when contract of sale is perfected b. Given when there is no contract of sale ©. Given to bind the offer or in a unilateral promise to sell or buy. @. Given as a separate consideration from purchase price. | Mr. AB offered in writing|to self his house and lot for P750,000 to Mr CD gn, Juynt," 1989, Mi CO requested tr AB to give nim 69 days within which to raise the P7S0,000. On August .15, 1989 Mr. AB informed Mr. CD that the price is raised and now at P1,000,000. Can Mr. CD compel Mr. AB to sell his house and ot at P750,000 which wae. offered in writing by Mr. AB? (Phil CPA, 90-1)—} An 2. Yes, becouse Mr. AB is alreauy estopael jhe velter eer b. Yes, Because the 60 days offer has not yet expired No, Because Mr. CD has not accepted the offer of tea : 4. Yes, because there was already meeting of the nines These are the basic principles or characteristics of a Contract. Which is the exception? (Phil CPA, 90-1) 3. Freedom or liberty to stipulate b. Obligatory force and compliance in good faith. ¢. Binding on third parties. d. Perfection by mere consent. The following is considered fraud or fraudulent: (Phil CPA, 90-1) a. Failure to disclose facts when there is duty to reveal them b.. The usual exaggeration in trade, when the other party had the opportunity to know the Facts, ¢. Misrepresentation made not in bad faith. d. “Caveat Emptor" or let the buyer beware. ‘The stipulation in @ contract to the effect that the debtor should remain as a servant in the house ond in the service of her creditors so long as she had not paid her debt, is void because itis: (Phil CPA, 91-1) 3. Contrary to good customs bs Contrary to public policy ¢. Contrary to law and morality d. Answer not given. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the couse 210 22.0 23 OH 6 ASA BL.50L StetPROFESSIONAL REVIEW and TRAINING CENT! which are to constitute the contract. Which of the Following constitutes an offer: (Phil CPA, 91-1) 2. An offer made through an agent b. Business advertisement of things for gaie. c. Advertisement for bidders, d. Answer not given 26. When one of the parties to @ contract is compeiled to give his consent by a reasonable and well grounded fear of an imminent and grave evil upon his person or property, or upon the person or property of his Spouse, descendants or ascendants, there is: (Phil CPA, 91-1) a. Violence c. Undue influence b. Intimidation d. Answer not given 27. Simulation of a contract may be absolute or relative. It is relative when: (Phil CPA, 91-1; 96-1) 2. The parties do not intend to be bound at all b. The contract is void. ¢. The parties conceal their true agreement. d. Answer not given 26. The proper remedy is annulment of contract and not reformation when: (Phil CPA, 91-1) 2. Mistake, fraud, inequitable conduct, or accident has prevented a meeting of the minds of the parties b. A mutual mistake of the parties causes the failure of the instrument to disclose their real " agreement. One party was mistaken. and the other knew of believed that the instrument did not state their agreement, but concealed the fact from the former. d. Answer not given. a 29. The action to annul 2 voidable contract, such as a contract where one’ of the parties is incapable of giving consent to the contract is extinguished by: (Phil CPA, 91-1) a. Novation c. Ratification b. Rescission d. Answer not given 30,A sold a residential land to B. 6 paid the consideration. When 6 wanted to register the sale at the Register of Deeds, the latter refused to register it and required the presentation of the certificate of capital gains tax payments. What can & do? (Phil CPA, 92-1; 96-1) @, B may sue A to refund the consideration paid by 8 under the maxim “no one shall enrich himself at the expenses of another.” B cannot compel A to returri the selling price because the contract Is not enforceable. ¢. B-my possess the residential land as 3 buyer in good faith. 3. B may compelA to pay capital gains tax and secure the Certificate of Capital Gains Tax payment. 31, A’contract is in the stage of conception when: (Phil CPA, 92-1) a. There is meeting of the minds. b, Negotiations are in progress. &. The parties come to the agreement. 4. The contract is perfected. S2.Mr. A, Santos signed a letter addressed and delivered to Mr. S. Aguas. The terms of the letter are 1. An offer to sell a 500 sq. m. lot for P30,000.00. 2. An option time up to October 31, 1991 for Mr. , Aguas to raise the 300,000.00. 3. Upon payment of the P300,000.00, Mr. A. Santos will execute and sign a Deed of Sale. 26.18 Page 3 of 5 www.pric.com.ph 35, 36. 38, 39. Cae" 9. Odo. 91.8 22.4) 33.0 94.8 oF On October 31, 1991, Mr. A. Santos sent a letter Mr. S. Aguas asking for 8 new price of P350,000. for the 500 sq. m. lot. Can Mr. S. Aguas compel h A. Santos to accept the P300,000.00 and make h sign and execute a Deed of sale? (Phil CPA, 92-2; 5 1 (name modified) a. No. Mr. S. Aguas did not accept the offer of 8 S. Santos b. Yes. Mr. A. Santos is already estopped by I signed letter and offer Yes. There was actual meeting of the minds. d. Yes. The contract is perfected Three (3) of the following contracts are void, Whi is not? (Phil CPA, 92-2) 2 Contract in writing contemplating and asking | impossible service b. Oral authority given to an agent in sale of land © Oral partnership agreement where immovat Property is contributed ©. Oral partnership agreement when capital is mo! than 3,000.00 It takes place when the parties do not intend to t bound at all by their agreement: (Phil CPA, 93-1; 9 1; 97-1) 8. Apparent contract 5. Absolutely simulated contract ©, Relatively simulated contract d. Deed of assignment. In order that fraud may make a contract voidable (Phil CPA, 94-2) a. It may be incidental but both parties should ne be in pari delicto. b. It may be serious and the parties must be in pai delicto, It_may be incidental but should have bee employed by both parties. @. It should be serious and should have ‘not hav been employed by both contracting parties The person called to the succession either by th Provision of the will or by operation of the law. (Ph CPA, 94-2) a. Devisee c. Heir b. Legatee 4. Trustor Mr. Gambino owes Mr. Eglesia -P100,000. Gambin knows that on maturity date, he will not be able t pay Eglesia, and in order to’ prevent attachment 0 his property by Eglesia, Gambino, before maturity o! his debt, executes a contract pretending to sell to Mr Santos his property. Which of the following statements is not correct? (Phil CPA 95-2) 2. The contract is not valid for lack of consideration b. The contract is binding between Gambino and Santos. © The contract being simulated and executed to defraud Eglesia to void Mr. Eglesia can seek rescission of the fictitious contract. The process of intentionally. deceiving others by Producing the appearance of a contract which is different from the true agreement is: (Phii CPA, 96-2) 2. Relative simulation of a contract b. Absolute simulation of a contract Fraud d. Misrepresentation There shali be no reformation of contract in the following cases, except: (Phil CPA, 96-2) a. In testamentary willsPROFESSIONAL REVIEW and TRAININ 44. guardian of B sold 8's house d. Simple donation intervivos with né” condition being imposed ¢. When the real agreement is void 0. A contract of sale fraudulently made as-a contract of lease 40. When the object of the contract is outside the commerce of man, the contract is: (Phil CPA, 86-2) a. Rescissible ¢. Unenforceable b.. Voidabie d. Void 41, In order that fraud may make a contract voidable: (Phil CPA, 87-1) a. It may be incidental but should have been employed by both parties. b. It should be serious and the parties must be in pari delicto ¢. It should be serious and should not have been employed by both contracting parties. d. It may be incidental but both parties should not be in pari delicto. 42. A and 8 who are both emancipated minors entered into @ contract. The contract entered into by and between them is: (Phil CPA, 87-1) a. Rescissible c. Voidable b. Unenforceable d. Void 43, Which of the following contracts cannot be ratified? (Phil CPA, 87-1) a. Those whose cause or abject did not exist time of the transaction b. Unathorized contracts c. Those where both parties are incapable of giving consent. d. Those that fail to comply with the Statute of Frauds. at the and 40,000 for P240,000. (Phil CPA, 87-2) 2. The contract cen be rescinded because of inadequacy of price. b. The contract cannot be rescinded because there is no fraud, mistake or undue influence. . The contract cannot be rescinded because all elements of contract are present. G. The contract cannot be rescinded because it is expressly provided by law as one of the contract cannot be rescinded, lot worth, 45. X enter into a contract with 'Y whereby X sold his land orally to Y. The land has been delivered and the money has been paid. Is the-oral sale of the land valid? (Phil CPA, 87-2) a. The contract is not valid because it is not in writing as required by the Statute of Frauds. b. The contract is not valid because the contract is ‘ot in public instrument. ©. The contract is unenforceable 4. The contract is valid: pétause the contract is already perfected and-éxecuted 16. To defraud his creditors, A contracted B by selling a land to B. B now seeks to register the land with the Register of Deeds. Xa creditor of A seeks to prevent the registration on the ground that the contract is rescindable. Despite X's objection may the land be registered based on the contract in B’s name. (Phil CPA, 87-2) a, The land cannot be registered based on the contract which is rescindable, b. The land cannot be registered contract is in fraud of creditor. c. The land can be registered based on the contract because the contract is not yet rescinded. because the A890 42:8 40h 4A 4lD 4, age 4 of 5 w w.prte.com Sh 48. 50. 51 82. d. The land can be registered because the contract is valid and can be attacked collaterally in a land registration proceeding. On July 15, 1986, X entered into a contract with Y. On February 10, 1987, X discovered that fraud was committed at the time he entered into the contract a fraud that vitiated his consent. The action for annulment shail be brought. (Phil CPA, 87-2) 2. Within three years from the time of the fraud b. Within four years from February 10, 1987 ¢. Within four years from the time A entered into the contract d. On February 10, 1987 On September 1, 1987, A entered into @ contract with B, whereby A selis to B 5,000 sacks of suger to be delivered on the 15" and to be paid in full on the 30%. There was no agreement for rescission based on non-payment. A did not deliver on the 15 but on the 30" he was willing and offering to deliver. But 8 did not make payment on said date and so A did nat like and refused to make the delivery. Decide, (Phil CPA, 87-2) a. A cannot rescind the contract for non payment of the price b. A cannot refuse to deliver the goods. c. Bis not entitled to recover damages. 4. can rescind the contract for non payment of the price. X alleged that Y promised to give X one hectare of land. This is in consideration of X's meritorious service to Y. Y pleads in defense that since the promise was not in writing, it'is unenforceable under the Statute of Frauds, Decide. (Phil CPA, 87-2) a. The promise is unenforceable because it is not in writing ». The Statute of Frauds is applied because A has rendered services already. ¢. The Statute of Frauds is inapplicable here, because the promise to give the land is not a sale of real property. d, The Statute of Frauds can apply to partially executed contracts. A has a daughter 8; X has a son Y. A, 8, X and ¥ agree together that Y will marry B, The agreement is oral. If B latter on refuses to marry Y who has spent for the necessary wedding preparations and X and Y bring an action against A and B, will the action prosper? Decide: (Phil CPA, 87-2) a. Between Y and B, the action will not prosper because the agreement is made orally b. In case of A and X, the action will prosper because the agreement which was made orally is enforceable as is based on the consideration of marriage. ¢. As to A and X, the action will not prosper because the agreement is not enforceable as it was not they who mutually promised to marry each other. Gd. The action of X and Y against A and 8 will prosper because the agreement is based on the Consideration of marriage other than mutual promise to marry, Contracts entered into during lucid interval are: (Phil CPA, 89-2) a. Unenforceable b. Voidable ©. Void 6. Answer not given A contract executed by two (2) parties and one (1) of the parties is nat capable of giving consent, the contract is: (Phil CPA, 89-2) 2. Voidable ‘Void b._Rescissible Unenforceable EO SD AB 501PROFESSIONAL REVIEW and TRAINING CENTER, INC. 53. Three (3) of the following contracts are void. Which one is not? (Phi! CPA, 89-2) a. Oral contract of Partnership. of three (3) partners and capital contribution is more than P3,090 in cash b. Written services, ©. Oral contract of Partnership where real estate is contributed as capital. 4. Agent's authority to selt property given orally. contract contemplating impossible 54. Cecilio had Ricardo kidnapped and tortured Eduardo for refusing to sell his (Eduardo’s) laid to Cecilio, Eduardo who could no longer bear the physical pains Inficted upon him signed a.cocument of sale in favor of Cecilio. This sale is: (Phil CPA, 91-2) 2. Void ©. Valié b. Voidable 4, Answer not given 5S. Choose the contracts which are voidable. (Phil CPA, 92-1) a. Those, undertaken in fraud of creditors when the latter ‘cannot in any other manner collect the claims due them. b. Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud. ¢. Those whose object is autside the commerce of man. 9. Those where both parties are incapable cf giving consent to a contract. 56.Mr. Esguerra, a former government employee, suffered from severe paranola and was confined in the mental hospital in. 1981. After his release he was placed under the guardianship of his wife to enable him to get retirement pay. In 1984 he became a ‘mining prospector and sold some mining claims. In 1987 he sued to annul the'sale claiming that he was not mentally capacitated at the time of sale. The sale in-question was: (Phil CPA, 93-1; 97-1) a. Illegal ©. Voidable b. Void ¢. Valid 57. Contracts entered into @ state of crunkenness or Guring 3 hypnotic spell are: (Phil CPA, 93-1; 97-1) a. Void c. Voidable b. Vali d. Legal 58. Reluctantly and against her good sense and judgment, Rosemarie entered for the delivery of 5 tables to Corazon for a price of 15,000. Contract is (Phil CPA, 83-1; 97-1) 2. Void b. Voidable c. Unenforceable 6. Valid 59. Rescission of contract can take place in this case: (Phil CPA, 93-1; 97-1) &. When the things which are the object of the contracted are legally in the possession of third persons who acted in bad faith. b. When he demands rescission can return whatever he may be obliged to restore. When the party seeking resolution can perform only as to part and rescind as to remainder. ¢. When the seller cannot return the instalments paid to him by the buyer. 60. A intimidated 8 to marry A's daughter. After a year, 8 would like to file action for annulment but could not do so because A was around to intimidate him. The ‘marriage contract is: (Phil CPA, 93-2) a. Rescissible ©. Void £3 A O.B Se-BWP or, 6 Page 5 of 5 61 63. 64. 65, 66. 67. DAB By Www.orte.com.ph 6. Unentorceable The following, except one, are the characteristics b. Voidable void or inexistent contract. Which is the exceptior (Phil CPA, 93-2) 2. The defense of illegality of the contract available to third persons whose interest is n Cirectly affected. b. They are not subject to ratification The right to raise defense of illegality cannot waived. d. The action or defense for declaration of th nullity or inexistence of the contract does mi prescribe. Statement 1: A contréct whose cause or object di not exist at the time of the transaction is a defectiv contract which cannot be remedied by providing cause or abject as the case may be in the contract, Statement 2: The nullity of the accessory obligatio or of the penal clause does carries with it the null Of the principal obligation which remains in force an demandable. Determine whether: (Phil CPA, 94-1) 2. Statement Tis true but statement if is false. b. Both statement are false ©. Statement Tis faise but Statement II js true d, Both statements are true. The guardian of an insane person sells a house an lot belonging to the latter valued at P100,000 to 8 buyer for P74,000 with the approval of the court. The contract is: (Phil CPA, 97-1) a. Valid , Unenforceable b. Rescissible e. Void ¢ Voidable Andy is the representative of Babes, an absentec sells a house and lot valued at P100,000 for only P60,000. The contract is: (Phil CPA, 97-1) a. Valid d..Unenforceable ©. Rescissble ©. Void © Voidable Which of the following contracts is not void ab initio? (Phil CPA, 97-2) ® That whose object is outside the commerce of men. . That whose object did not-exist at the time of transaction. ¢. That which contemplates an impossible service. , That which is undertaken is fraud of creditors, Contracts which cannot be sued upon unless ratified, thus it is as if they have no effect yet, are: (Phil CPA, 97-2) a. Voidable b. Rescissible c. void 4G. unenforceable Which of the following contracts is valid? (Phil CPA, 97-2) 3. Oral contract of agency giving authority to an agent to sell the land belonging to the principal b. Oral partnership agreement where immovable Broperty in contributed. © Oral contract of sale of an. immovable property entered into by an agent who was given authority orally by the principal. 9. Oral agreement to answer all expenses. for the wedding reception if A marries 8, AS A 63.4 HED wep ~ oe ; BL.501 ett 08 ff » Manila 7339344/7347003 * Cebu City 032 2557777 Sines 1977 BUSINESS LAW BL.501.0BLIGATION AND CONTRACTS PROFESSIONAL REVIEW and TRAINING CENTER, Inc. 122 * Davan City 082 2250048 * Cagayan de Oro City 08822 725150 GPA REVIEW MALVAR/J.ONG/T.LOPEZ OCTOBER 2008 COMPILATION OF CPA BOARD EXAM (May 1983 ~ May 1998) OBLIGATIONS 1. Théduyph of a thing has the right to the fruits of the thitgrTPhil CPA, 89-2) a. From the time the thing bought is delivered » b, From the time the sale is perfected c. From the time the obligation to deliver the thing bought arises. d. From the time the fruits are delivered 2, The obligation of the employer to pay death benefits and funeral expenses for his employer's death while in the course of employment as sanctioned by the Workmen's Compensation Act is one that arises +. from: (Phil CPA; 91-1) 33. “Law b. Contracts c. Quasi contract d. Answer not given 3. When A voluntarily takes’ charge of the neglected business: of 6 without the latter’s authority where reimbursement must be made for necessary and useful expenses, there is a: (Phil CPA, 97-2) a Quasi delict cc: Negotiorum gestio b. Quasi contract 4. Solutio indebiti a, 4. tt is(60) 2 souce BE fataity Sfbn wait entitle the injurse ergy to damages: (Phi CPA, 93-2) €. Dishonesty, malice or bad faith in the 5.! Unless, the law or, the stipulation of the parties required another standard of care, the abligation to give a thing carries with it'the obligation to take care Of it with: (Phil CPA, 91-1) a. Extra ordinary diligence b. Ordinary diligence ¢. Diligence of a good’ father af @ family 6. Answer nat given 6. Y sold his horse to Z for PS0,000. No payment has yet been ‘made and the sales document does not provide the date of ‘delivery. Before delivery and payment, the horse gave birth to @ baby horse. (Phil CPA, 88-1) a. 2 is entitled tothe baby horse which was horn after the perfection of the contract. b.” Ys entitled to the fruit (baby horse) as Z has not paid the price yet. c. 'Y is entitled to the fruit (baby horse) because it was born before his obligation to deliver the horse. d. Z should pay additional amount for the baby horse to be entitled to it. 7. X is under obligation to deliver: his dis. However, before deliyéry & destroys the car. Which one of the following 6 not.correct? (Phil CPA, 98-1) 2. X's obligation to give his car to ¥ is extinguished b.” X is ellowed to recover from Z €. Y has a right to Dring-action against Z - @. X is not obliged to give ¥ an equivalent value of the car Malin NAB Page 1 of 8 va Ds ee 8. Mr. Montecilio entered into @ contract with Mr. A. Villarojo by which Mr. Montecillo promised to deliver @ 1,000 cases of glassware of the class and at the price stipulated in the contract. Such delivery, was to be made during the months of February and March, 1991. In this case, no further demand or notice by Me. Villarojo on Mr, Montecillo was necessary because: (Phil CPA, 91-1) a. Time is the essence of the contract. b. The obligation expressly so provides. c. The demand would be useless, | 4. Answer not given. —F chtme—D in, SEM tage 9. This person is tlable for the loss'of the subject matter by fortuitous event: (Phil CPA, 85-2; 88-1; 89-1) a. Creditor c. Both a and b >. Debtor d. None of them 10. A borrower who uses the thing for a purpose different from thet intendes, delays its return, receives the thing under appraisal, lends it to a third person, oF © saves his property instead of the thing borrowed shall be liable even in case of fortuitous event, because: (Phat CPA, 91-1) 2. The ‘noture of assumption of risk », The parties have expressly stipulated ligbity. : c. The law so expressly provides. Low pe usfil 4, 4. Answer not given. the obligation requires the such L1.Mr, ABC ts obliged to give Mr. XYZ his only car on July 15, 1987. Mr. ABC did not deliver the car on July i 15, 1987, On July 20, 1987 an earthquake destroyed the building where the car was in garage and the car, twos destroyed. Ts Me. ABC stil able? (Phil CPA, 88. Steel one No. Considering that no"démand to deliver was made by Mr. XYZ and the specific thing was lost due to fortuitous event, the obligation is extinguished. b. No. the obligation is extinguished, even if the debtor is already in default, because the debtor an plead impossibility of performance: c. Yes. Mr. ABC Is already In legal celay, thus the obligation to deliver the lost specific thing is converted Into monetary caim for éamages. d. Yes. The creditor ean instead “demand. Tor a substitute equivalent in value from the debtor 12. When the thing deteriorates pending the fulfillment of the suspensive condition without the fault of the debtor, the impairment is: (Phil CPA, 98-1) to be borne by the party who caused the deterioration to be borne partly by the ‘debtor and partly by the creditor . to be borne by the debtor d. to be borne by the creditor 13. A promissory note signed by Martiniano and dated March 15, 1991 is worded as follows: “I promise to pay Juanita ‘the sum of Fifty Thousand Pesos (P50,000) provided that if she should fail in the.) b. Conditional PROFESSIONAL REVIEW and TRAINING CENT! October, 1991 CPA. Examination, she-shali return to me said amount.” The above note gives’ rse to an obligation with: (Phil CPA, 91-2) a. Suspensive condition’ ¢, Resolutory congition b. Casual condition d. Answer nat given 14, If the obligor binds himself to perform his obligation a5 soon as “he shall have obtained a loan from a certain bank, this obligation is: (Phil CPA, 93-1) a. With a term . Suspensive d. Resolutory 15. A condition with, if imposed on an obligation will be disregarded and will therefore make the obligation immediately demandable: (Phil CPA, 94-1) a. If Juan commits suicide b. If Juan passes the bar exemination © If uan kills Pedro d. If Juan will not rise from the dead 16. A to sell B his lot and house in the city if A decides to transfer and live, in the countryside” is an example of: (Phil CPA, 94-1) a. -Mixed condition cc. Casual condition 8: Potestative condition. Resolutpry condition Le “gS Ae vy ‘ 17. The obligation is Gkmandable on the’ ddle of the obligation and shat! continue to be in force up to the arrival of the day certain: (Phil CPA, 95-1) a, Resolutory period c. Indefinite period b. Suspensive period 6. Legal period 18. When the debtor binds himself to pay when means permit him to do so, the: obligation is: (Phil CPA, 97- 2) a: Conditional «. Simple b. “Pure 4d. With 2 period 19. When the debtor: binds. himself to pay when his means permit him to do, the obligation is considered as one: (Phil CPA, 91-1) 2. With 2 condition dependent upon the debtor's sole will, b. With a period. c, That is void. 6. Answer not given 20. On July 1, 1969 A signs a promissory note and binds himself to pay X P100,000 plus 15% per anaum interest on June 30, 1991: (Phil CPA, 90-2) a, Before June 30, 1991 X can demand payment. b. If on June 30, 1990 A is paying X. X cannot refuse the payment. ©. Because the period is for the benefit of the debtor, A can compel creditor X to eccept payment any date before June 30, 1991 d. Because the period is for the benefit of the debtor and creditor, X can refuse eny tendered Payment before June 30, 1991. 21, Whenever in an obligation a period is designated, itis presumed to have been established for the benefit of: (Phil CPA, 98-1) ‘a. both the creditor and the debtor b. “the creditor c. the debtor 4. the thied party 22. Mr. AB owes Mr. CO P150,000 due on August 31, 1987. Mr. AB executed a mortgage in favor of Mr, CD on Mr. AB’s building to guaranty the obligation. On August 10, 1987 the mortgaged building was totally lost due to’ 2 strong typhoon. On August 12, 1937, Teed (850 19-8 o. 0 ap A az. Page 2 of 8 5 “vw. prte.com.ph 24, 25. @ AP aye at. D Mr: CD demanded payment from Mr. AB. Is Mr. CD's emand valid? (Phil CPA, 88-1) a. No. The obligation is one with a definite period, thus the creditor cannot demand fulfillment of the obligation as such would the prejudicial to the rights of the debtor. b. No. The obligation is extinguished because the obligation is lost through a fortuitous event. c. Yes. The debt becomes due at once because the guaranty was lost even through a fortuitous event unless the debtor can mortgage another property that is equally satisfactory. d. Yes. The debt becomes due at once because, from the tenor benefit is given solely to the creditor thereby giving the creditors the right to demand performance even before the date. © gets a Joan of P100,000 from P,-which becomes due on November 23, 1993 and mortgaged his house as security for the debt. On September 22, 1993, the mortgaged house was completely destroyed by fire. A week after, P demanded payment from 0 on September 29, 1993. Is P’s demand valid? (Phil CPA, 93-2) a. No, because the obligation is one with a definite period and the demand would be prejudicial to the rights of the debtor. No, the obligation is extinguished because the object of the obligation is fost through a fortuitous event. ‘Yes, the debts become demandable because the period established is for the benefit of the creditor. d. Yes, the debt becomes demandable because the collateral was lost through a fortuitous event. b, Mr. Santos secured and Mr. Dizon granted a loan of » 100,000 due for payment on December '31,1988. Mr. ‘Santos executed a first mortgage of his residential house in favor of Mr. Dizon to guaranty the P100,000 Ioan. On October 19, 1988. the residential house was totally destroyed by typhoon Unseng. On October 31, 1988 Mr. Dizon demanded payment of the loan from Mr. Santos. Is the demand of Mr. Dizon for payment valid. (Phil CPA, 89-1) a. No. The obligation is one with a definite date for payment on December 31, 1988 and until that date arrives, Mr. Santos is not liable to pay. b. No. The object of the obligation was lost through 2 fortuitous event and the obligation was extinguished. ©. ‘Yes. The obligation became due at once because the guaranty was lost through a fortuitous event. ¢. Yes. The obligation became due at once because from the tenor benefit, the creditors is given the right to demand performance even before the due date stipulated Mr. Cruz executed a first mortgage of his house in favor of Mr. Dizon on May. 15, 1986 to guaranty a mortgage loan of 200,000. due for payment on May 15, 1987. On September 16, 1986 the house was completely destroyed by a typhoon. On September 18, 1986 Mr. Dizon demanded payment. from Mr. Cruz of the loan. Is Mr, Dizon's demand for payment valid? (Phil CPA, 88-2) . No. The obligation is one with a definite period, so the creditor cannot demand payment until the definite due date arrives. b. No. The obligation is extinguished because the abject of the obligation is lost through a fortuitous event. c. Yes. The obligation becomes due at once because from the tenor benefit of the creditor solelyPROFESSIONAL REVIEW and TRAINING CENTER, INC thereby giving the creditor the right to demand performance even before the due date stipulated. Yes. The obligation becomes due at once because the guaranty was lost even through fortuitous event, unless the debtor can mortgage another property that is equally satisfactory. 26. When the period is “on or before a date”, the debtor has the benefit of the period. This benefit is lost and the obligatign becgmes demandabie when: (Phi Cea, 50-2) Ad. Te 2. The debtor attempts to abscond b. After contracting .the obligation, the creditor suspects the debtor to becoming insolvent. c. The quarantee given by the debtor is not acceptable to the creditor. . Demand by the creditor could be useless. 27. A solidary obligation is one. in which each of the debtor is liable for the entire obligation or debt and each of the crediters is entitled to the entire credit. Obligations shall also be considered solidary under the following three exceptions. Which does not belong to the exception? (Phil CPA, 87-1) A could recover P2,000 only from Xx. A could recover P1,000 only fram X A could recover P8,000 from X, A’in turn has t give B, C and D. 33. A and B are solidary debtors of X, ¥ and 2, joir creditors to the amount of P15,000. How much can collect fram 8? (Phil CPA, 88-2) 2. Z could recover P7,500 from B b. 2 could recover 5,000 from. B ©. Z could recover P15,000 from B. Z in turn has t give X and ¥ PS,000 each d. 2 could recover P15,000 from 8. B in turn cay collect from A the amaunt of P7,500. 34. A, B and C borrowed P24,000 from Y and Z signed ¢ Promissory note dated January 15, 1987 and dué within six (6) months. How much can ¥ collect fron A? (Phil CPA, 88-2) a. 12,000 b. P4,000 . P6,000 ¢. P24,000 35. A, B and C borrowed P36,000 fram X and Y. The three (3) debtors signed a ‘promissory note :January 10, 1988 promising to pay the creditors on or before a. When solidary is expressly ‘stipulated in the obligation. July 10, 1988. How much can xX collect from C? (Phi b. When the prestation is indivisible and, there, are, CPA, 89-1) two or more debtors and creditors. 7, “Stes 2, 18,000 ©. P12,000 ¢. When the law expressly provides soli@atity “2577 b. P6000 d. P36,000 or Gotgatone nt Teauied Fom the mature oF SE his is the promissory note: We promise t pay A, & ee Mew and C the sum of ONE HUNDRED EIGHTY THOUSAND 28. A, B and C secured a loan from X. The promissory note which evidences the obligation stated. “! promise to pay” and signed by A, B and C. The Obligation is; (Phil CPA, 87-1) a. Joint c, Divisible b. Solidary 4. Indivisible 29. The cregitor shall have a right to indemnity for Gamages when, through the fault of the debtor, al the things which are alternatively the object of the obligation have been lost or compliance of the obligation has become impossisle. The indemnity shall be fixed as a basis: (Phil CPA, 87-1) 2. The value of the least expensive thing b.. The value of the most expensive thing ©. The value of the last thing which disappeared. d, The value of the first thing which disappeared 30. 4, B and C are solidary debtors of x in the amount of 12,000. X then made a demand from A but was blo to collect P8,000 only because X was remitting A’s share of P4,000. How much can A callect each from B. and C? (Phil CPA, 87-2 modified) >. P12,000 c. P6,000, b. PB,C00 4d. 4,000 31. A and B are joint creditors: mancomunados of X and Y, joint debtors for a total-sum of P9,000. A owns 1/3 of the credit; B owns 2/3 of it. But X owns 2/5 of the debts; Y owes 3/5 of the debt. In this case: (Phil CPA, 87-2) fb mnrmmaten fe gt, 2B can only caliect from’X, 5,400 and frdm ¥, 3,600 A Can only collect from xX, P4,500 and from ¥, 4,500, A ean only collect from x, P3,600 and from Y, P5,400, 8 can only collect from X, P9,000 and from ¥, PO. b, c a. 32, X and Y are solidary debtors af A, 6, C and D joint creditors to the amount of PB, How much can A collect from X? (Phil CPA, 88-1) a. A could recover P4,00 fram X. A, in turn has to give 8, C and D, P1,000 each “Page 3 of 8 ~~” www prte.com.ph re Aad B of-% 24.0 30.0 21 63 (P180,000) PESOS within 60 days. Signed X, Y and 2": (Phil CPA, 89-2) 2. X is obliged to pay A P20,000 b. X is obliged to pay A P60,000 ©. X is obliged to pay A P180,000 d. is obliged to pay A, 8 and-C P180,000. 37. A, B, C and D are joint creditors of € and F, solidary debtors in the amount of P40,000. How much can A, 6 and C collect from €? (Phil CPA, 90-1) 2, A, 8, C and D could collect P20,000 from E. b. A, 8, Cand D could collect P30,000 from E. c. A, B, Cand © could collect all the P40,000 from E d. A, B,C and D could collect P20,000 from E and 10,000 from F, 38. A-1 and A2 are solidary debtors of 8-1, B-2 and 83, Joint creditors in the amount of P90,000. How much Can B-3 collect from A-2? (Phil CPA, 90-2) 2. B-3 could collect P30,000 from A-2 b. 8-3 could collect P90,000' from A-2 and give 30,000 each to B-1 and B-2. 8-3 could collect P45,000 from A-2 and give 15,000 each to 8-1 and B-2. 4. 8-3 could collect P15,000 from A-2 and P15,000 from A-1. « 39. Bertulfo and Claudio promise to deliver a particular cer valued at P100,000 to Manuela on or before September 15, 1991. September 15, 1991 came and “sVfupon demand by Manuela for delivery from Bertulfo and Claudio. Bertulfo was willing to deliver but Claudio refused to deliver. In the case at bar: (Phil CPA, 91-2) 8. An action for specific performance will lie against both Bertulfo and Claudio. b. Both Bertulfo and Claudio shall be tiable for 50,000 each with damages, ‘i . Bertulfo shall _be liable for P50,000 without damages and Claudio shall be liable for P50,000 and damages. @. Answer not given “BL.501 Be. A 5266 2B BsPROFESSIONAL REVIEW and TRAINING CENTER, INC 40. Carlito, Alfredo and Francis owed in salidiim P15,000 to Ricardo as evidenced by a promissory Aote due on September 30, 1981. The note. prescribed on September 30, 1991. On October 10, 1991, Carlito paid Ricardo. In this case, Carlito is: (Phil CPA, 91-2) 2. Entitled to collect P5,000 each from Alfredo and Francis. b. Not entitled to reimbursement from his co- debtors for the shares of the latter. . Entitled to recaver from Ricardo. d. Answer not given, is @ promissory note: "We promise to pay Dalsa, Cristina and Catherine the sum of P18,000" (Signed) Jeng, Bambi and Gail: (Phil CPA, 92-1) 2.. Gail is obliged to pay Catherine P6,000. b. Gail is obliged to pay Catherine P2,000. ©. Gail is obliged to pay Catherine P12,000, 4: Gail is obliged to pay Daisa, Bambi and Catherine P18,000. 42. Carlo and Cleo are solidary debtors of Corina, Luis, Edward, and Abelito, Joint creditors in the emount of 20,000. How much can Corina collect from Carlo? (Phil CPA, 92-1) a. Corrina could collect P2,500 from carlo, b. Corrina could collect P10,000 from Carlo, Corrina is then obliged to give P2,500 each to Luis Edward and Abelito . Corrina could collect P5,000 from Carlo, 4. Corrina could collect. the whole P20,000 from Carlo but will in turn’ give PS,000 each to Luis, Edward and Abelito 43. In a joint obligation, A, B and C are debtors of joint creditors, D, E and F in the amount of P180,000.00. A's obligation is: (Phil CPA, 92-2) a. Pay D P60,000.00 b. Pay D, E and F, P180,000.00 c. Pay. P120,000.00 d. Pay D P20,000.00 t refers to joint obligation: (Phil CPA, 93-1) a. One in which each debtor is liable for the entire obligation and each creditor is entitled to demand the whole obligation, One in which either one of the parties is indispensable and the other is nat necessary. One in which the obligation of one is @ resolutory condition of the obligation of the other, the non. fulflllment of which entitled the other party to rescind the contract. d, One in which each of the debtors is liable only for a proportionate part of the debt and each creditor is entitled only fora proportionate part of the credit, 44 A, B and C secured a load from 0. The promissory note which evidence the obligation states: "I promise to pay 0 or order P:10,000 payable an demand” (Sg) ABC. The obligation is: (Phil CPA, 95-1) a. Solidary c. Indivisible b. Divisible d. Joint 45. X, Y and Z joint debtors owe P18,000 to A, B and C, solidary creditors. How much can_A collect from xX? (Phil CPA, 95-1) a. P3,000 c. P9,000 b. P18,000 4d. P6,000 47.X and Y are solidary debtors of A, B and C, joint creditors to the amount of P30,000. How much can 8 collect from X? (Phil CPA, 95-1) a. B can collect P30,000 from X.-B n turn has to give A and C P10,000. b._B can collect 10,000 from x. Page 4 of 8 we 48. 49. 50. 51. 52. 53. 54, Ww ‘w.prtc.com.ph 40. Bo 4B 42. 6 45.0 44.9 ASA 4oy c. B can collect P15,000 from x. d. B can collect P60,000 from .X. X in turn can recover from ¥ the amount of P15,000. A, B and C solidarily owe X and Y P30,000. x remitted the entire obligation in favor of A. The effect is: (Phil CPA, 97-2) 2. The obligation is not extinguished. until A collects from 8 and C. b. The obligation is not yet extinguished until ¥ is paid by X of Y's share of the credit. c. A cannot recover from B and C because remission in his favor extend to the benefit of B and C. d. A can recover from B and C their respective share of the debt. In a Joint obligation, A,B, and C are debtors of joint creditors ©, & and F, in the amount of P180,000. A’s obligation is: (Phil CPA, 96-1) 3. Pay D 60,000.00 b. Pay D, E and F P180,000.00 c. Pay D P120,000.00 6. Pay D P20,000.00 This is @ promissory note: “We promise to pay Dulce, Carina and Corina the sum of P180,000.00" (sqd) Jovy, Bimbo and Garry. (Phil CPA, 96-1) Garry is obliged to pay Corina P6,000.00 Garry is abliged to pay Corina P2,000.00 Garry is obliged to pay Corina P12,000.00 Garry is obliged to pay Dulce, Bimbo and Corina P18,000.00 eoce X and ¥ and Z solidarily owe A, 8, C, D, joint creditors P30,000. How much can A collect from x? (Phil CPA, 96-2) a. 7,500 only b. 20,000, A in turn has to give P5,000 to B, C, and D ¢. P10,000, A in turn has to give P2,500 each to B, Cand 0 d. P5,000 only A, B, and C solidarily bound themselves to deliver to X a. Honda Motorcycle. The obligation was not fulfilied through the fault of A, Thereupon, X filed an action in court against C and the court awarded 36,000 to X. Which of the following situations is valid? (Phil CPA, 96-2) a. IfC pays X the P36,000, C can collect from’A and 8 12,000 each representing their proportionate share in the value of the prestation. b. X has to collect P12,000 each from A, 8, and C to satisty the court's award of P36,000. c. If C pays X the P36,000, C:can collect from 8 10,000 and from & PL6,000. 4. X cannot collect the whole amount of P36,000 from C. XYZ are solidarily liable to A for P30,000 which mature on July 1 1993. On May 1, 1993, X paid A for the whole amount of the debt. If on December 1, 1993, X will be reimbursed by Y, the latter will be ble for: (Phil CPA, 98-1) a. P10,000 with interest December 1, 1993 b. P10,000 without interest ¢. P10,000 with interest from May 1, 1993 to July 1, 1993 4. P10,000 with interest December 1, 1993 In an obligation where only one (1) prestation has been agreed upon, but to extinguish the obligation (ae tA A ea. BL BOT ce! Bae 49,0 ooh from July 1, 1993 to from May 1,1993 tothe debtor is allowed and does render another Substitute, the obligation is a. Facultative Obligation b. Simple Obligation c. Alternative Obligation 6. Conjoint Obligation 55. An obligation where only the presentation nas been agreed upon but the debtor may render another in substitution is: (Phil CPA, 98-1) @. conjoint obligation c, simple obligation b. facultative obligation d. alternative obligation 56. A obliges himself to pay X P100,000 in 30 days plus 2 Penalty of P20,000 if A fails to pay the abligation in ‘A. due time. A failed to pay the obligation in 30 cays, X can Gemand from A: (Phil CPA, 90-2) a. The principal of P100,000 plus 920,000 penalty. b. The principal of 100,000 plus P20,000 penalty, plus legal interest damages. Cc. The principal of P100,000 plus legal interest. G. The principal of P100,000 plus P20,000 penalty, plus legal interest, plus damages. 57. X obliged himself to pay ¥ the amount of P30,000 30 Gays after May 31, 1993 plus a penalty of P3,000 i he fails to pay the obligation on due date and after demand for payment by Y, offered to pay on July 30, 1993. Y can demand from X: (Phil CPA, 94-2) a. 30,000 plus’P3,000 plus iegal interest. b. P30,000 plus legal interest ¢. P30,000 plus P3,000. 9. P30,000 plus P3,000 plus legal interest plus damages. 58. Which of the following statements is not correct? (Phil CPA, 96-2) & Actual delivery of the thing or payment of the price is not required for the perfection of the sale. b. A stipulation “that even when the object. is delivered to the buyer, ownership will not pass until the price is fully paid is not vati¢ © Assale is consummated upon delivery of the thing and the payment of the purchase price 9. Sales through letters or telegrams are deemed perfected only when acceptance by the buyer has been received: by the seller. 59. This special form of payment is the conveyance of the ownership of a thing as accepted equivalent of Performance. (Phil CPA, 85-2) a. Dation in payment or dacion en pago b. Assignment of property or cession en pago ¢. Application of payment d, Tender of payment and consignation 60. When the characters of creditors and debtor are merged on the same person, the mode of extinguishing an obligation is called: (Phil CPA, 86-2) 8, Confusion or merger c. Novation b. Compensation d. None of the three 51. When the characters’ of the creditor and the debtor are merged in one and the same person, there is extinguishment of the obligation by: (Phil CPA, 96-2) 3. Compensation c. Novation b. Merger of rights d. Remission 62.8 executes promissory note in favor F 8 and that Promissory note is negotiated by 8 and subsequently indorsed in favor of A. The obligation to pay the said Promissory note is thereby extinguished because there is: (Phil CPA, 91-1) 2. Confusion or merger, b. Novation SSB Page 5 of 8 ©. Remission d. Answer not given Sep 9 63. When two (2) persons are reciprocally debtors a creditors, there is: (Phil CPA, 88-2, 89-1) a. Consignation c. Compensation b. Merger d. Confusion 64, This mode of extinguishment of obligations is wh two (2) persons, in their own rights, are creditc and debtors of each other. (Phil CPA, 90-1) 2. Merger or consolidation b.. Condanation or remission Compensation 4. Novation 85. Takes place when two persons in their own right, 2 creditor and debtor of each other: (Phil CPA, 98-1) 2. Remission c. Novation b. Confusion 6. Compensation 66. When two person in their 6wn rights are reciproca! Creditors and debtors of each other and extinguish: both debts to the concurrent amount, what tak: place is known as: (Phil CPA, 91-1) a. Compensation b. Novation c. Confusion and merger d. Remission 67. It Is 3 mode of extinguishing an obligation when tn persons in their own right are creditors of each othe (Phil CPA, 86-2; 94-1; 94-2) a. Confusion c. Compensation b. Reformation d. Novation 58. Compensation shall take place when: (Phil CPA, 91 1) 2 One of the debts arises from a depositum or fror the obligations of a depository or of a bailees i commodatum. 5. One of the debts consists in civil liability arisin from a penal offense. ©. Two persons, in their own right are creditors an debtors of each other, d. Answer not given. 69. When the debtor abandons. and assigns all hit properties in favor of his creditors for the latter t sell to satisfy his credits, this is: (Phil CPA, 90-1) a. Remission : Dation in payment b. Payment by cession —_d. Expromission 70. When the debtor abandons or transfers all his properties to the creditors so that the creditors may sell the properties and out of the net proceeds the creditors recover their claims this is called: (Phil CPA, 90-2) 2. Dacion en pago b, Tender of payment and consignation ©. Payment of cession d. Remission 71. The leviable properties of the debtor are transferred to the creditors to be sold and from the proceeds, the creditors are paid: (Phil CPA, 94-2) 2. Pledge ¢. Dacion en pago b. Cession d. Chattel mortgage 72, It presupposes not only that the obligor is able, ready, and willing, but more. so, in the act of performing his obligation. (Phil CPA, 93-1) a. Promissory note b. Tender of payment c. Bill of exchange d. Obligation to settPROFESSIONAL REVIEW and TRAINING CENTER, 73, 24, 75, 76. 77. 78, 80. Page 6 of 8 Consignation is 2 mode of payment which extinguishes an obligation. Which of the following is, not a requisite for consignation? (Phil CPA, 87-1) a. Actual consignation with the proper judicial authorities. b.. Prior notice has not been made. c. Existence of a valid debt, d, There must be prior notice of consignation to persons interested in the fulfillment of the obligation. If the creditor to whom tender of payment has been made refuses without just cause to accept it, the debtor shall be released from responsibility by: (Phil CPA, 91-1) a. Assignment of property . Consignation of the thing or sum due. c. Adjudication or dacion en pago. 3. Answer not given An act of liberality whereby a creditor condones the obligation of the debtor: (Phil CPA, 98-1) a. Confusion c. Remission b. Compensation . Novation A owes B P10,000. With consent of both; C pays B P5,000. Now B and C are the creditors of A to the amount of P5,000 each. Suppose A has only PS,000, Which is correct? (Phil CPA, 98-1) a. Band C should divide the P5,000 equally b. Cshould be preferred c. Amay choose whom to pay J. 8 should be preferred A thing is not deemed lost when it: (Phil CPA, 98-1) a. Perishes b. disappears in such a way its existence is unknown or It can not be recovered €.. goes out of commerce d. deteriorates. Dacion en pago as distinguished from sale: (Phil CPA, 98-1) a. the object is always existing and specific b. there Is @ greater degree of freedom in fixing the price ¢. there is no pre-existing obligation d, - the cause is the price . Payment of the obligation by a-solidary debtor shall not entitle him to reimbursement from his co- debtors: (Phil CPA, 87-1) a. If such payment was made before the obligation is due. b. IF such payment was made after the obligation has prescribed or become illegal. c. If such payment was made in compliance with the demand to him by all the creditors. d, If such payment was made after the obligation has become due and demandable and notice of payment was made only to him, OE is obliged to give OR his 1982 Mitsubishi, 4 door sedan Lancer with plate number NBA 123 on September 30, 1989. On October 10, 1989, OF id not yet deliver the car which was totally destroyed by an earthquake on such date. Is OE still liable? (Phil CPA, 89-2) 2. No. The obligation is extinguished. The specific thing was lost due to fortuitous event and no demand or deliver was made by OR b:' Yes. OE is in legal delay. OR can claim damages. c. No. Even OF is already in default and can plead impossibility of performance Ww” W.prte.com.ph 39-8 94.6 900 70 42.0 96 A 29.8 ERD 2.0 95. 81 82. 83. 84. d. Yes. OR can instead demand for another car of equivalent value from OE. In three (3) of the following cases advanced payment by the debtor is not recoverable. Which is the exception? (Phil CPA, 89-2) a. The obligation was not due and demandable but the debtor believed it was already due and demandable. b. The payment is only for interest and credited to the proper period. c. The advance payments parties reciprocally. d. The debtor was not aware of the period. were made by both In this case, advance payment by the debtor is recoverable: (Phil CPA, 90-1) a. If the advance payment is only of interest due. b. If the creditor demanded for the advance payment and the debtor knew it was not yet due. c. If the advance payment is in reciprocity to the advance payment of the other party. d. If the debtor was unaware of the period C is the creditor of D in the amount of P50,000. @ is the guarantor of D paid C partially with P20,000. A not knowing the partial payment of D and against the will of D paid C the amount of 50,000. What is the effect of this payment in the obligation: (Phil CPA, 89-2) a. The obligation is extinguished, A cannot recover any amount from D but A can demand reimbursement from C in the amount of PS0,000. b. The obligation is extinguished, A can demand 30,000 from D because this amount benefited D or A having subrogated into rights of C can proceed against guarantor G. c. The obligation is not extinguished. A’s payment against being the will of O does not extinguish the obligation. G. The obligation is extinguished. A can demand 30,000 from D, but if D cannot pay, A cannot ordinarily proceed against guarantor C because A is not entitled to subrogation, A owes X P50,000 payable on ar’ before June 30, 1990. S wha is not a party ‘to the contract and without the consent and against the will of A paid 1980 when the prevailing rate of interest was 12% per annum. (Phil CPA, 90-2) a. S can ask reimbursement from A in the amount of P50,000 plus 12% interest from April 1 to June 30, 1990, . Scan ask reimbursement from A in the amount of P50,000, c. S cannot ask reimbursement from A because the payment by S is without the consent and against the will of A. d. $ can ask refund from X because the payment by S was against the will of A. When an obligation is extinguished because of the Passage of time, this is: (Phil CPA, 90-2) a. Fulfillment of resolutory condition. b. Arrival of a resalutory period c. Prescription d. Rescission The following shall produce the effect of payment of debts: (Phil CPA, 91-1) a. Delivery of check b: Tender of Central Bank Notes > <. Delivery of Pramissory Notes. d. Answer not given, Rando) BL.501 nyB eg ©-8 eC87. The distinction between conventional subragation and assignment is that in conventional subrogation: (Phil CPA, 91-1) 2. It is a mere cession of right. 3 b. An obligation is extinguish and another appears. © The same obligation, without being extinguished, is transferred to another. 6. Answer not given. pacoND on oonBESEh A indeed to 2 for 950,000 for a 20 day period. A proposed to & that X wll pay W's debt and that A will be Tree from a abilities, and X agree to the proposal. On October 25, 1987, X became insolvent. At the time of delegation, X wes already insolvent but this was not known tA. The insolvency fs not of public Knowledge. So ® sues @ on the ground that was A who mage propossl thet A guaranteed X's salvency. Decide: (Phil CPA, 87-2) 20 Ais liable because he Is presumed to have guaranteed X's solvency b, A's not liable, Because A does not know the insolvency of X at the time of delegacion and nether was the insolvency of public knowlease A is liable because he did not exercse due diigence in determining the insolvency of X Ais lable because X agree to the proposal to make himself solidary Hable forthe obligation 88. '89. Sale is distinguished from dation in payment in that in sale: (Phil CPA, 91-2) 2. There is @ pre-existing obligation or credit. b. The cause is the price, ©. It is a mode of extinguishing an obligation in the form of payment. d. Answer not given, 90.Mr. Debtor owes” Mr. Creditor who has two (2) legitimate emancipated children, 50,000.00 payable on December 31, 1991, (Phil CPA, 9. a. If Mr. Debtor dies before December 31, 1991, Mr Creditor cannot collect from the heirs of Mr Debtor. If Mr. Debtor dies before December 31, 1991, Mr. Creditor can collect from the heirs of Mr. Debtor. If Mr, Creditor dies, his two (2) legitimate emancipated children cannot recover from Mr. Debtor his obligation. If both Mr. Debtor and Mr, Creditor die, the heirs of Mr. Creditor can collect fram the heirs of Mr Debior. 91,0n June 5, 1981, Jose Dizon of Angeles City is obliged to give Ruben Samia, Jose Dizon's red crew cab. There was no delivery until June 15, 1991 when the gerage of the red crew cab collapsed due to heavy ash and sand spewed by Mt. Pinatubo and the red crew cab was totally destroyed. After the crew cab was destroyed and lost, is Jose Dizon still liable? (Phil CPA, 92-2) 2. No. Even if Jose Dizon wes already in default, he Could plead impossibility of performance b. Yes. The obligation to deliver the crew cab is changed to pay the equivalent value because Jose Dizon is in-legal delay ©. No, Because there was no demand by Ruben Samia to deliver the crew cab ano the specific object was lost due to fortuitous event. The obligation is extinguished d. Yes. Because the contract is perfected 92. The P1,000 bills issued by the central bank and in circulation are considered: (Phil CPA, 93-1) a. Checks ©. Legal tender 6. Promissory note ©. Bills of exchange Ze Page 7 of 8 PROFESSIONAL REVIEW and TRAINING CENTER 93. One of the following statement is not true: (Phil CPA 93-1) A creditor is not bound to accept a check i a. Satisfaction of his demand, because a check ever if good when offered, does not meet th requirements of legal tender: b. The obligation of a debtor who had agreed to pa in dollars in a foreign bill of exchange, shall b discharged in Philippine currency measured a the prevailing rate of exchange at the timé obligation was incurred. c. The Philippine peso bills when attempted to b exported, as when carried in excess of tha allowed by the CB regulation, may be deemed t have been taken out of domestic circulation a: legal tender and thus treated as commodity. 4. The purchasing power of value of money oi currency depends upon, can come into being car be created or brought about by a law enacted by the legislative department of the Government. 94, Jesus owes Maria P1,000.00 on June 30, 1993. Maris owes Jesus P600.00 due on June 20, 1993. Maria owes Jesus P400.00 dué on June 30, 1993, Maria owes Jose P1,000.00 due.on June 30, 1993. On June 25, 1993, Maria cannot pay Jose P1,000.00 50 she assigns to Jose her credit card of Pt,000.00 against Jesus without the knowledge of Jesus. On July 2, 1993, Jose tries to collect from Jesus the 1,000.00. How much can Jose compel to pay? (Phil CP, 95-2) — 0 enolate ng Ulm a. Zero ¢. P600.00 &. 1,000.00 400.00 95. X, a minor sald to Y his parcel of land for P 100,000. From the proceeds of the sale, X deposited P30,000, in the bank spent for food, clothing and other personal expenses P20,000, joined a tour abroad costing 20,000, tost ‘in gambling P20,000 and loaned P10,000 to Z who became insolvent. Upon reaching the age of 21 years, X files an action for annulment which the court granted. Y was required to return the land to X and X was,made to retyrn to ¥ the amount of: (Phil CPA, 94-1)-fo Machen of bu, a. P30,000 ¢. P80,000 b. Pa0,000 @. P70,000 96. A obliged himself to give B a car if 8 places among the top ten in the CPA Board Exam. Subsequently, they agreed that A will give 8 the car if 8 merely Passes the CPA Board. This is an exemple of: (Phil CPA, 94-2) a. Mixed novation ¢. Implied navation b. Real novation d. Personal novation 97, One is not a requisites needed in order that obligation shail be extinguished by loss or destruction of the thing due: (Phil CPA, 94-2) 8. When the thing is lost without the fault of the debtor, b. When the thing lost is generic. © When the thing is lost before the debtor has incurred in delay. 9. When the thing lost is specific, 98. Which of the following is not an element of Compensation: (Phil CPA, 95-1) 2. Debts to be compensated are due and demandable. b. There is controversy or adverse claim over any debts to be compensated. > ©. There are two or more debts of the same kind, . There are two persons who “are creditors and debtors of each ather, 92D A ISD WB 99.8 9B a99, Which of the examples given bélow can compensation take place? (Phil CPA, 95-1) 2. A owes B P1,000 due on June 30, 1993. 8 owes A P1,000 due on June 30, 1993 but C has filed an adverse claim against A. sl b. A owes B P1,000 payable October 31, 1993) 6, 198 Wes A P1,000 due on October 31, 1993 A owes B P1,000 with C as his guarantor. 8 owes CP1,000.~3 Wok nimet A owes 8 P1,000 Ase Tay 31, 1993, 8 to deliver to A 2 piculs of um worth P1,000 on May 31, 1993.5 dee. chat dik lee& Since 1977 BUSINESS LAW \\ PROFESSIONAL REVIEW and TRAINING CENTER, Inc. * Menia'7339344/7347903 * Cebu Cty 032 2557777 LOC 122 * Davao Cy 082 2250049 * Cagayan de'Oro Cy 08822 725150 CPA REVIEW BL.505.SALES, AGENCY AND CREDIT TRANSACTIONS MALVAR/J.ONG/T.LOPE: OCTOBER 2008 SALES, AGENCY AND CREDIT TRANSACTIONS SALES NATURE AND FORM OF THE CONTRACT. Contract of sale one of the contracting parties obligates 2 himself to transfer the ownership and to deliver a determinate thing, and the other to pay therefore a rice certain in money or its equivalent. (1458) & contract of sale may be absolute or conditional Contract of sale Buyer. pay the price ‘Agency to sell ‘Agent remit the price to his principal ‘Agent. does not become the owner after delivery to him. No warranty by the agent Buyer become the owner after delivery ‘There is warranty by: the seller * A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his business manufactures or procures for the general market, whether the same. is on hand at the time or Rot, is @ contract of sale, but if the goods are to be Manufactured specially for the customer and upon his special order, and not for the general market, it is 2 contract for @ piece of work. (1467) the parties may stipulate that ownership in th thing shall not pass to the purchaser until he hz fully paid the price. (1478) Object or subject matter ~ determinate thing which | the object of the contract +The thing must be licit and the vendor must hav 2 right to transfer the ownership thereof at th time it is delivered. (1459) + Goods which may be the. object of contract « sale 2. Existing goods, owned or possessed by th seller, b, Future goods or goods to be manufacture¢ raised, or acquired by the seller after th Perfection of-the contract of sale. There ma be a contract of sale of goods, whos acquisition by the seller depends upon contingency which may or may not happen (1462) Things having a potential existenc may be the object of the contract of sale, Th efficacy of the sale of a mere hope o expectancy is deemed subject ‘to th Condition . that the thing .will come int existence. The sale of a vain hope oi expectancy is void. (1461) ‘Lamoun ) Characteristics of a contract of sales 1. Consensual 4. Commutative 2, Bilateral 5. Nominate 3. Onerous 6. Principal Elements of contract of sales 1: Consent + The sole owner of a thing may sell an undivided interest therein, (1463) + The contract of sale is perfected at the moment there Is a meeting of minds upon the thing which Is the object of the contract and upon the price. From that moment, the-partles may reciprocally demand performance, subject to the provisions of the lav. governing the form of contracts. (1475) a Parties are face to face ~ offer must be certain and acceptance be absolute. Qualified acceptance constitute counter offer. b. Negotiated thru: phone ~ As if the parties are face to face © Correspondence or thru telegram - Offeror receives or has knowledge of the acceptance by the offeree. . Subject to suspensive condition - Condition is fulfilled * The ownership of the thing sold shall be transferred to the vendee upon. the actual or constructive delivery thereof. (1477) However, 3. Contract of sale Piece of work Emptio rei sperati__|: _ Emptio spei Ordinary course of ordinary course of | | Sale of an expected thing _| Sale of the hope itself business siness [TF the expected thing does | It does not matter Produce for the general | Manufactured specially not materialize the sale |'whether the expected market | - | not effective. materialized or not; whet Covered by ‘statute of | Not covered by statute oF] | is important is that the fraud if the sae | nls provided. i will be hope itself validly existed Betsenaloroperty is P509 | performed within one |_| Réfers to future thing that | Refers to present thing = oc-mare ax_sale_of real | year. which is expected for ‘certainiy the hope or ‘property regardless of | expectancy already.exists + A thing is detgsminate when wie bar culerly designated o} ated from all other of the same class. The requisite that a thing be determinate'is satisfied if at the time the contract is entered into, the thing is capable of being made inate without the necessity 2 new or further agreement tween the parties. (1460) » Things subject to a resoliitory condition may be the object of the contract of sale. (1465) + In the case of fungible goods, there may be a sale of an undivided share of a specific mass, though the seller purports. to sell and the buyer to buy & definite number, weight or measure of the goods in the mass, and though the number, weight or measure of the goods in the mass is undetermined. By such a sale the buyer becomes owner in’ common of such a share of the mass as the number, weight or measure bought bears to the number, weight or measure ‘of the mass. If the mass contains less than the number, weight or measure bought, the, buyer becomes the owner of the whole mass and the seller is bound to make good the deficiency from goods of the same kind and quality, unless a contrary intent appears. (1464) Cause or Consideration (Price) - price certain in money or its equivalent. Page 1 of 19 Www.prte.com.ph BL.505+ Gross inadequacy of price does not affect a contract of sale, except as it may indicate Gefect in the consent, or that the parties really intended ‘a donation or some other act or contract. (1470) + The fixing of ‘the price can never be left to the discretion oF one of the contracting parties However, if the price fixed by one of the parties is accepted by the other, the sale is perfected (1473) +) Where the price cannot be determined or in any other manner, the contract is inefficacious However, if the thing or any part thereof has been delivered to and appropriated by the buyer he must pay a reasonable price therefor. What is a reasonable price is a question of fact dependent on the circumstances of each particular case (1474) + Ifthe price is simulated, the sale is void, but the act may. be shown to have been in reality 3 Genation, or some other act or contract. (1471) + When price certain 2. Specific amount agreed upon b. No specific amount agreed upon 1.-Certainty with reference to another thingy certain 2aDetermination of price was left to the Judgment of third person. Should such person or persons i ble or unwilling to fix it _-the_perties subsequently agree upon “the’price = If the ‘third person oF persons acted in bad faith or by mistake, the courts may fix the price. 2 Where such third person or persons are preveatéd from fixing the price or terms by fault of the seller or the buyer, the party not in fault may have such remedies against the party in fault as are allowed the seller or the buyer, as the case may be (1469) 3.LAThe price of securities, grain, liquids, and sther ‘things shall aiso be considered Certain, when the price fixed is that which the thing sold would have on a definite day, or in a particular exchange or market, or when an amount is fixed above or below the price on such day, or in such exchange. or market, provided sald amount be certain. (1473) + Ifthe consideration of the contract consists partly In money, and partly in another thing. (1468) a. Manifest intention of the parties. b. If such intention dogs nat cleariy appear, 1. “Barter if value of the thing > money paid 2. Sale if value of the thing =< monay paid + In the case of a sale by auction: @. Where goods.are put.up for sale by auction in lots, each lot is the subject of 3 separate contract of sale. -— b. A sale by auction is perfected when the auctioneer. announces its perfection: by the fall of the hammer, or in other customary manner. Until such ‘announcement is masie, any bidder may retract his bid; and the auctioneer may withdraw the goods from the sale unless the auction has been announced to be without reserve, ¢. A right to bid may be reserved expressly by or on behalf of the seller, unless otherwise PROFESSIONAL REVIEW and TRAINING CENTER, INC. provided by law or by stipulation, d. Where notice has not been given that a sale by auction is subject to a right to bid on behalf of the seller, it /shall not bé lawful For the seller to bid himself or to employ or induce any person. to bid at-such sale an his behalf or fer the auctioneer, to emplay or duce any person to bid at such sale on behalf of the seller cr knowingly to take any bid from the seller or any person employed by him. Any sale contravening this rule may be treated as fraudulent by the buyer; (1476) Kinds of promise (1479) 2, Bilateral promise to buy and sell reciprocally accepted 6. Accepted unilateral promise to buy ©. Accepted unilateral promise to Sell. Policitation - Unaccepted unilateral promise or offer to sell or buy a thing. Whenever earnest money is given in a contract of sale, it shall be considered as part of the price and 28.proof of the perfection of the contract. (1482) Risk of loss (1480) 1. Fungible and . non fungible things sold independently and for a: single price,, or without consideration ¢f their “weight, number, or measure, a Lost before perfection - Spiler, (Res perit domino) ~wine tputer wi! 97 b. Lost at the time of, perfection - Seller (Res perit domino) ¢. After perfection but before delivery - Buyer (exception to Res pirrit domino) J. After delivery ~ Buyer (Res perit domino) Fungible things be sold for a price fixed according to weight, number, or measure. . General rule: Vendor shal! suffer (Exception to the rule that vendegsghail suffer the risk of loss after perfection but des delivery) Exception: When the goods have been weighed, counted, or measured and, delivered, unless the latter has incurred in delay. Unless otherwise agreed, the goods remain at the seller's risk _until_the ownership therein is transferred to the buyer, but when the ownership therein is transferred to the buyer the goods are at the buyer's risk whether actual delivery has been made or not, except that: (1504) 1. Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance of the contract and the ownership in the goods has been retained by the seller merely to secure performance by the buyer of his obligations under the contract, the goods are iat the buyer's risk from the time of such delivery; 2. Where actual delivery has been delayed throught the fault of either the buyer or seller the goods are at the risk of the party in fault, Conflicts: Appiy principle of res perit domino, Effects of the contract when the thing sold has been lost (1493) a. Ifat the time the, contract ‘of sale is perfected, the thing wiiich is the object of the contract has been entirely, lost, the contract shall be witnout any effect. b. But if the thing should have deen lost in part only, the venslee may choose’ between withdrawing from the’ contract and demar.ding the remaining part, paying its price in proportion to the total sum agreed upon. Where the parties purport a sale of specific goods, and the geods without the knowledge ofPROFESSIONAL REVIEW and TRAINING CENTER, ING the selier have perished in part or have wholly or in a material part so deteriorated in quality as to be substantially changed in character, the buyer may at his option treat the sale: (1494) 1“'As avoided; or 2.¢ AS valid in all of the existing goods or in so much thereof as have not deteriorated, and as binding the buyer to pay the agreed pric + Sale of good by description a Sample or Description - the contract may be rescinded if the bulk of the goods delivered do not correspond with the description or the sample. b, Sample and description - the bulk of goods must correspond with the sample and the description The buyer shall have a reasonable “opportunity of © comparing the bulk with the description or the sample. (n) +” Forms General, rule - a contract of sale may be made in writing, oF by word of mouth, or’partly in writing and Partly by word of mouth, or may be inferred from the conduct of the parties. (1483). & Exception: @. Contract covered by statute of fraud (1403) 1. Sale of property not to be performed within 3 year from the making thereof; 2. Sale of reel property or of an interest therein regardless of the price; 3. Sale of personal property at a price not le: than five. hundred pesos (PSG0} 5. Contract where farm is required far validity 1. Sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing. (1874) Recto law a. In a contract of sale of personal property the Brice of which is payable in installments. b. Contracts purporting to be leases of personal Property with option to buy, when the lessor has Geprived the lessee of ‘the possession or enjoyment of the thing The vendor may. exercise any of the following remedies (alternative and ‘not cumulative or successive remedy) 1.” Exact _fulfiliment of the obligation, should the vendae fail to pay; 2. Cancel the sale, should the vendee's failure to Rey_cover two of mforeinstaIiments. Stipulation that the installments or rents paid shail nat be returned to the vendee or lessee shall be vaio insofar as the same may not be unconscionable under the cireumstances. (1466) 3. Foreclose Je on the thing sold, if one has been constituted, should the vendee's failure to pay cover two or more installments, In this case, he shail have.og further action against the pucchas fecover any unpaid balance of the ange. Any agreement to the contrary shall be void: The expenses for the execution and resistration Of the sale shall be borne by the vender, unless there is a stipulation to the contrary. (1487) The expropriation of property for public use is governed by special laws. (1488) excluding industrial lots, commercial buildinas and sal ip tenants where the buyer has paid at least two yea! cf_instaliments, the buyer is entitled to the followi rights in case he defaults in the payment of succesdir Installments: (Sec 3) Gove. Pol — | yah cag! a, To pay, without edditional interest/ the (eps installments cue within the total grace period earne by him which is Hereby fixed at the rate of or month grace perioc for every one year of installme! payments mage: Provided, That this. right shall b exercised by the buyer only once, in every five year of the life of the contract and its extensions, if any, b. If the contract is cancelled, the seller sha refund to the buyer the cash surrender value the payments on the property equivalent to fift ger cent of the total payments made, and, afte five years of install ments, an additional five pe cent_every year bult not to exceed ninety pe cent of the total payments made: Provided, Tha the actual cancellation of the act shall tak place after thirty days from receipt by the buye of the notice of cancullation or the demand fo rescission of the contract by 2 notarial act an upon full payment of the cash surrender valig tothe buyer. G&V=D/_ x tut: PATmetc Ted /, Bown payments, deposits or options on the lodtilac shall be included in’ the comoutation of the tota number of installment payments made. aR + In case where less than two years of installment were paid, the seller shall_aive the buyer ‘race period of not jess than sixty days from th date the installment became due. TF the buyer fails to pay the installments due at th expiration of the grace period, the seller may cance the contract after thirty days from receipt by the buyer.of the notice of cancellation.or the demand fo rescission of the contract hy a notarial act, (Sec 4) + The buyer shall have the tioht to sell_his rights o assign the same to another person or to reinstate the sontract. by updating the account during the .orace period and before actuat cancellation of the contract The deed of sale or assignment shall be done by notarial act. (Sec 5) + The buyer shall have the right to pay in advance any installment or the full, unpaid balance of the purchase price any time without interest and to have such full payment of the. purchase price annotated in the certificate of title covering the property, (Sec 6) + Any stipulation in any contract hereafter entered into shall be null and void: (Sec 7) CAPACITY TO BUY OR SELL General rule: Ati persons who can obligate themselves, may enter Into a contract of sale’ (1489) Where necessarias are ‘those sold and delivered to a minor or other person without capacity to act, he must pay a reasonable price therefor. Exception: Sale of property including sales in legal redemption, compromises and renunciations. (1492) by the following 1, The husband and the wife cannot sell property to each other, except: (1490) 2. When a separation of property was agreed upon in the marriage settlements; or b. When there has been a judicial separation of Property Eifect of sale: Void 2. Those persons who cannot acquire by purchase, even at a public or judicial auction, either in person Eee Law ~ Realty Instaliment Buyer Act (R.A. or through the mediation of another. (1491) @ The guardian, the property of the person or persons who may be under his guardianship; b. Agents, the property whose administration or sale may have bee: entrusted to them, unless ~BL.505_ Coverage - All.transactions or contracts invalving the sate ‘9r financing of real. estate on installment payments, including “resigential, condominiu iments butPROFESSIONAL REVIEW and TRAINING CENTER, INC the seller have perished in part or have wholly in a material part so deteriorated in quality as t be substantially changed in character, the ouyer may at his option treat the sale: (1494) 1. AS avoided; or i 2. As valid in all of the existing goods or in so much thereof as have not deteriorated, and as binding the buyer to pay the agreed price for the goods in which the ownership will pass, if the sale was divisible + Sale of good by description a. Sample or Description - the contract may be rescinded if the bulk of the goods delivered do Rot correspond with the description or the sample. b. Sample and description - the bulk of goods must correspond with the sample and the description. The buyer shall have @ reasonable opportunity of comparing the bulk: with the description or the sample. (n) + Forms General rule - a contract of sale may be made in writing, of by word of mouth, or partly In writing and Partly by word of mouth, or may be inferred from the conduct of the parties. (1483) Exception: a. Contract covered by statute of fraud (1403) 1. Sale of property not to be performed within a year from-the making thereof; 2. Sale of real.property ar of an’ interest the regardiess of the price; 3. Sale of personal property at a price not less than five hundred pesos (P500) 6, Contract where form is required Zor validity 1. Sale’ of a piece of land or eny inter Is through an agent, the author latter shall be in writing. (1874) + Recto law @. In a contract of salé of personal aroperty the price of which is payable in instaliment 5. Contracts purporting to be leases ef personel Property with option to buy, when the lessor has. Weprived the lessee of the possession or enjoyment of the thing The vendor may exercise any of the following remedies (alternative and not cumulative - or successive remedy) 1. Exact fulfillment of the obligation, should the “vende fail to pay; 2, Cancel the sale, should the veniee's feilure to Pay cover two or mare instaliments, Stipulation that the installments or rents paid shall not be returned to the vendee or-lessee shall be valia insofar as the same may not be unconscionable under the circumstances. (1488) 3. foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee's failure to pay cover two or more installments. In this cese, he shall have no further action against the purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be void. ) The expenses for the execution and registration of the sale shall be borne by the vendor, unlest there is @ stipulation to the contrary. (1487) | The expropriation of property for public use is governed by special laws, (1488) taceda Law - Realty Installment Buyer Act (R.A. 3552) ‘overage - All transactions or contracts involving the sale fF financing of real estate on installment payments, neluding re excluding indus s, commercial buildings and sales to.tenants where the buyer has paid at least two years of installments, the buyer is entitled to the following fights in case he defaults in the payment of succeeding installments: (Sec 3) 2. To pay, without additional interest, the unpatd installments clue within the total grace period earned by him which is hereby fixed at the rate of one: month grace perio for every one year of installment payments mace: Provided, That this right shall be exercised by the buyer only onee in every five years of the life of the contract and its extensions, it any b. If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty ner cent of the total payments made, and, after five years of install ments, an additional five per cent every year but not to exceed ninety per cent of the total payments made: Provides Thot the actual cancellation of the contract shall tale place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by @ notarial act and upon.full payment of the cash surrender value to the buyer Down payments, deposits or options on the contract shall’ be included in the computation of the total umber of installment payrnents, made. + In case where less than two years of installments were paid, the seller shall_give the buyer_a grace period of not Jess than sixty days from the slate the installment became due Tf the buyer fais to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyes of the notice or the demand for rescission of the hy a notarial act. (Sec 4) + The buyer shall_h: s rights. or assign (he'same to another person or to reinstate the Sontract by_updating the account during the grace neriod and Before actuat of the contract. The deed of sale or assignment shall be done by notarial act. (Sec 5) + The buyer shell have the right to pay in advance any installment or the full unpaid balance of the purchase », price any time without interest and to have such full, payment of the purchase price annotated in the. certificate of title covering the property. (Sec 6) + Any stiputatigny jp-anycqngract hereafter entered into. shall be null and void. (See 7) aan) CAPACITY TO BUY OR SELL General rule: Ail persons who can obligate themselves, may enter into a contract. of sale (1489) Where necessaries are those sold and.delivered to a minor or other person without capacity to act, he must pay @ reasonable grice therefor. Exception: Sale of property including sales in legal redemption, compromises and renunciations. (1492) by the following: 1, The husband and the wife cannot sell property to each other, except: (1490) 2. When a separation of property was agreed upon in the marriage settiemients; or b. When there has been @ judicial separation of property Effect of sale: Void Those persans who cannot acquire by purchase, even.at 8 public-or judicial auction, either in person or through the mediation ‘of another. (1491) 8. The guardian, the property of the person or Bersons who may be under his.guardianship: b. Agents, the property whose administration or sale may have been entrusted toOwner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimibursing the price paid thersfor. 4. Purchases made in a merchant's store, or in fairs, or markets, in accordance with ihe Code of Commerce and special laws &. Where the seller of goods has # vuidable title thereto, but his title has not been, avoiced at the time of the sale, the buyer acquires a sjood title fo the goods, provided he buys them in good faith, for value, and without notice of the seller's defect of titie. (1506) f. Where the selier subsequently acquires Negotiable document of title - a document of title in Which it is stated that the goods referred therein will be delivered to the bearer or to the order of any Person named in such document. Non-negotiable Document of Title - 3 document of ttle which does not state that the goods referred to therein will be delivered either ta bearer or to the order of any person named therein Kinds of negotiable documents of title bill of lading dock warrant; quedan; Warehouse receipts or order; and any other document used as proof of possession Oras authority to transfer the goods represented by it IMPLIED Warranties of the person who negotiates 3 document of title by indorsement or delivery, 1, That the document is genuine; 2. That he has legal right to negotiate or transfer it; 3. That he has knowledge of no fart which would impair validity or worth of the doctiment; and 4. That he has a right to transfer the title £0 the goods and that the goods are misrchantabie or fit for particular purpose. (Art. 1516, CC) Unpaid seller: 1. When the whole of the price has not been paid or tendered; and 2 When 3 bill of exchange or other negctiable instrument has been received as a conditional Payment and the.condition was broken by reason of dishonor, insolvency of the buyer or otherwise. (Art. 1525, cc) Remedies of the unpaid seller, notwithstanding that the ownership in the goods yay have Pagsed to the buyer a 1." Bossessory lien on the goods or Tait Yo retain them for the price while he is in possession of them; 2. In ‘case of insolvency of the buyer,“tight of stoppa transitu after he has partec! with Hie possession of them; 3." Right of resale; and 4u-Right to rescind saie instances where the unpaid seller may retain the goods i+ Where the goods:have been sold without any stipulation as to credit 2. Where the goods have been sold on creaii!, but 1@ term of credit has expired 3. Where the buver becomes insolvent. , * The selier may exercise his right of lien or rete-ncion notwithstanding that he is in possession of the «ya0%'s 95 agent or ballee for the buyer (Art. 1527, CC) Instances where the unpaid seller loses his Fight to retain the goods 1. When he delivers the goods to a carrier | other_bailee for transmission 0 the buy: without reserving ownership in the goods or tt right to possession thereof; 2. When the buyer or his agent lawfully obtain possessions of the goods; and 3._By waiver thereof * The unpaid seller of goods, having lien thereor does not hase his lien by reason only that he ha obtained judgment for the price of the goods (Ari 1529, CC) Exercise of the right of stoppage in transitu 1. Obtaining actual possession; or 2. Giving notice of ciaim to’ the carrier or othe bailee + .When notice of stoppade:in transitu is given b the. seller to the carrier, or other bailee i possession of tne goods, he must redeliver th goods to, or according to the directions of, th seller. + The expenses of such delivery must be bome by the Serer” + If, “however, a negotiable document of title fepresenting the goods thas. been issued by the carrier or other. tiailee, he:shall not obliged te deliver or justified “in, delivering the goods to the seller-tinlass. such.document-is first: surrendered for cancellation Effect of: sale of goods subject to lien or stoppage in transit ® Where goods not covered by negotiable document of title ~ The purchaser can acquire only such right as that buyer then had. b. Where goods covered Ly negotiable document of title. - Mo seller's tien or°right of stoppage in transitu shall defeat the right of any purchaser for value ‘n good feith to whom such document has been negotiated. When resale is allowable (1533) 1, Where the goods are perishable in nature 2. When the right to recell is expressly reserved in case the buyer stiould make a default; and 3. Where the buyer delays in the payment of the price for an unreaso.rable time. Mot essential to the validity of resale that notice ¢f an intention to resell the goods be given by the seller to the orig.nal buyer but giving or feilure to give such notize shall be relevant in any issue involving the question whether the buyer had been in default fer an unreasonable time before the resale was mz dle. iis, however, essential wefore the rescission be made thot the unpaid suller should have @ right Of Hien or stopped the goods in transitu. (Art. 1533, CC) Effect of resale 2. The seller is not Hable for any profit made by such resale, but may ‘12cover from the buyer damages for any loss occ isioneci by the breach of the contract of sale. it is not essential to the vali ity of resale that notice of an intention to -esell the goods be given by the seller to the original buyer, But where the right to reselt Is not based on the pe'ishable nature of the g90ds or upon an express provision of the contract of sale, the giving or failure to gi se such notice shall be relevant in any issue involving “the question whether te buyer had been in defaulc for an unreasonable time before the resale was made It is not essentiai to the vali ty of a resale tha! notice of the time and place of such resale should ©given by the seller to the origine! buyer The seller is bound to exercise reasonable’ are ‘and judgment in making a resale, and may make a resale either by public or private sale. He cannot, however, directly or indirectiy buy the goods (1533) Instances where the unpaid seller has the right of rescission 1. Where he expressly reserved the right too ‘89 in case the buyer shiould make default: and 2. Where the buyer has been in default’ in the ment of the ptice for unceasonabile +. lenath of time, It Is, however, essential before the rescission Lie », Made that the unpaic! seller should have a rigitt Of lien ar stopped tthe goods in transitu. (Art 1834, Cc) The transfer of title shzuil not be held to have bes n rescinded by an unpaid seller until he has manifeste ¢ by notice te the buyer or by same other overt act an intention to rescind. It is: not necessary that suc! overt act should be communicated to the buyer, but the giving or failure ta give notice to the buyer of the intention to rescind shall be relevant in any issise Involving the question whether the buyer had been in default for an unreasonable time before the right 2f rescission was asserted The vendor is not hound to deliver the thirag Sold incase the: vendee should lose the ria! make use of the terms as Provided in Article (Debtor lose every right to make use of the perlad? (Art. 1536, CC: The vendor is bound to deliver the thing sotd and ts accessions arid accessories in the condition in whic they were tipon the perfection of the contract, (Art 1537, CC) All the frates shall pertain to the vende from the day on which the contract was perfected a. No date .stipulated for the delivery - From the perfection of the contract d. Date stipulated ~ from the obligation to deliver arise. The rules in Article 1189 shall be observed in case of loss de:terioration or.improvement of the thing before its delivery, the vendor being considered the debtor (Art, 1538, CC) Sale of real estate 1. With statement of its are’s at the rate of 2 certain price for_s unit_of measure or number The vendor shail be obliyed to deliver to the vende, if the latter should demand it, all that fay have been stated in the contract;. bu should this be not possible, the vended may choose between. (1539) a. 2 proportional reduction of the price . -Ruscission of the contract a. If the Jack in erea is at least 1/10 4 that stated-or stipulated (applies to area stated in the contract, not to the true or actual are). b. If the deficierscy in quality specified in the contract: exceeds 1/10 of the price agreed upon © If the vendee would not have bought the immovapie had he krown of its smaller 2rea or inferior quality inrespective of the extent of the lack in_area or quality. Made for a lump sum and not.at the rate of a setsein sum for a unit of meaisure or number 6 oF 19 EESSIONAL REVIEW and TRAINING CENTER, INC! or When two or more iinmovabls, asinale price ‘here shali be no increase or decrea: price, although there be @ greater or less number than that stated in the cont (Reeson: The parties ascertained its area a quality before the contract was perfected) 3. When area or number stated together with boundaries The vendor shall he bound to deliver all that is cluded within said boundaries, even when it exceéds the area or number specified in the contract; and, should he not be able to do so, a. Reduction in the price, in proportion to what 15 lacking in the area or number, b. Contract is rescinded because the vendee does not accede to the failure to deliver what has been stipulated. (1 542) The actions for recission or reduction in hail oresctibe in six months, counted fram.the + If there is & greater area or number in the immovable than that stated in the contract, the vendee may accept the area included in the contract and reject the rest. If he accepts the whole area, he must pay for the same at the contract rate. (1540) + _ Requisites of Double Sales @ The two. (or more) sales transactions must constitute vatid sales &. The two (or more) sales transactions must pertain tc exactly the same subject matter. two (or more) buyers at odds over the heFul ownership of the subject matter must each represent conflicting interests. . The two (or more) buyers at odds’ over the rightful ownership of the subject matter must each have bought from the very same seller. Rules_of preference in_case of double sale (1844), 1. . TF the same thing should. have been sold to cifferent vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it sta ROBEY. — 2, Should it be immovable property, the ownership shall belong to the person acquiring it who in good! faith “first cecorded it in the Registry of Propert Should there be_no-inseriptien,..the.ownership jail Gertain to the person who in good faith was first im the possession; and in the absence theresf, to the person who presents the oldest title, provided there is good faith. (Art 1544, Cc) CONDI TIONS AND WARRANTIES +. Express warranty - any affirmation of fact or any Promise by the seller relating to the thing if the Aaturel tendency of such affirmation ar promise is to induice the buyer to purchase the same and if the buyer purchased the thing relying thereon. + Imptied warranties in 2 contract of sale L.implied warranty against eviction; and 2 eapied warranty against hidden gerets ‘vanty in case of eviction ~ an implied warranty in contracts of saie, by virtue of which the vendee is Genrivea of the whole or part of the thing purchased by e finat jutdament based on the right prior to the salé or an act.imputable to the vendor, such vendor shal! answer for the eviction even though nothing hasPROFESSIONAL REVIEW and TRAINING been said in the contraét on the subject (Art. 1548, cc) + Requisites of warranty against eviction i. There is a final judgment; (1557) 2. Purchaser has been deprived in’ whole or in part of the thing sold; 3. Deprivation was by virtue of a right prior to the sale effected by the seller; and 4. Vendor has been previously notified of the compiaint for eviction at the instance of the purchaser. (1558) + Waiver by the buyer (Warranty against eviction) 3. Waiver consciente 8. Without knowledge of risk of eviction. b. To pay the value which the thing sold had at the time of the eviction 2. Waiver intencionada 8, With Knowledge of risk of eviction and assumed consequences b. Vendor not liable + The Seller must pay in case of eviction: (VICED) 1. Value of the thing at the time of eviction. 2. Encome or fruits, if he has ordered to deliver them to the winning party 3. Costs of the suit which caused evivtion 4. Expenses of the contract, if the vendee has paid them: 5. Damages and interest (on cost, expense and damages), if seller was in bad faith Sale of immovable with non-apparent burden or servitude (1560) 1. If the non-apparent burden or servitude is recorded in the registry of property The buyer has no remedy except if there is express warrenty that the thing is free from all burden and encumbrances. 2. If the non-apparent burden or servitude is not recorded in the registry of property a.“ Rescission of the contract - within one year from the execution of the deed b. Damages - within one year from the execution of the deed or one year having elapsed, within one_year_from_the date on which he discovered the burden or servitude Winrranty aginst hidden defects or encumbrances 1. Implied warranty against hidden fault or defects a. If Visible - Not liable; If Not visible — Liable except if the vendee is an expert who by reason of his trade or profegsion should have known them.(1561) b. Vendor is responsible to the vendee for any hidden faults or defects in the thing sold, even though he was not aware thereot, (1566) 2. Implied warranty or condition a Merchantable Quality. (Fit for the general purpose) b. Fitness of the goods - buyer, expressly or by implication, “makes known to the seller the particular purpose for which the goods are acquired, and it appears that the buyer relies on the seller's skili or judgment (whether he be the grower or manufacturer or not), there is an implied warranty that the goocs . shall. be reasonably fit for such purpose. © Contract of sale of a specified articie under its patent or other trade name, there is no warranty as to its fitness for Page 7 of 19 CENTER, INC. eny part’sular purpose, unless there is stipulation to the contrary. (1563) An implied warranty or condition as t the quality or fitness for a particule purpose may be annexed by the usage ¢ trade. (1564) . Remedy in case of hidden detects Accion redhibitone (Withdrawal -or rescission) damages: b. Accion quanti minors © estiraatoria (Proportionat reduction in the price} + Damages ©. Action prescribed sfter_6 months from_th: delivery of the thing sold (1571) The buyer mus sue within .6 months not mere notification to th seller of the hidden defect. Loss of the thing with hidden defect @, Loss due ta the hidden fauit 1. Vendor was aware ~ Relurn the price + refune the expenses of the contract + DAMAGES 2. Vendor was not aware -° Return the price 4 Interest. + reimburse the exp,2nse of the contrac 5. Loss due to fortuitous event or faun” of the vendee 1. Price paid ~ value of the thing ar‘ loss; if acted ir bad faith liable for DAMAGES Sale of animal a. If two_or more animals are sold together. the defect in-one should not affect the sale of th. others whether the price was for lumpsum or separitte for gach animal except in'case of team, yoke, fair oF set is bought. (1572) b. There is no warranty against hidden defects of animals sold at fairs ‘or at public auctions, or of live stock sold as condemned. (1574) ¢ The sale of animals suffering from contay ious diseases shall be void. A contract of sale of anitrvals shall also be. void if the use or service for which th ey are acquired has been stated in the contract, ard they are found to be unfit therefor. (1575) 9. The redhibitory action, based on the faults o1 defects of animals, must be brought within forty, days from the date of their delivery to the:vendee. This action can only be exercised with respect to faults and defects which are determined by law ar by local customs. (1577) ©. If the animal should die within three days after its purchase, the vendor shall be liable if the dise: which cause the death existed at the time of the contract. (1578) f. If the sale. be rescinded, the animal shall be returned in the condition in which it was sold and delivered, the vendee being enswerable for any injury due to his negligence, and not arising from the redhibitory fault or defect. (1579) OBLIGATIONS OF THE VENDEE Principal obligations of the vendee (1582) i. Accept delivery b. Pay the price at the time and place stipulated ip the contract, if not stipulated at the time and place of the delivery of the thing sold. + No delivery by instaliment except if there is stioulation, + Generally, the buyer is entitled to examine the goods prior to delivery except 1.) when thére is stipulation; 2.) when the’ goods are delivered €.0.D. unless there is an agreement ora usage of trade permitting such examination. + When there is acceptance of the goods 2. Express acceptance b. When the buyer does an act which only an ownerPROFESSIONAL REVIEW. Vote: can do ¢. Failure to return after reasonable lapse of time The vende shall owe interest for the period between the delivery of the thing and the payment of the Brice, in the following threé cases: (1589) Should it have been so stipulated; 2. Should the thing sold and delivered produce fruits or income; 3 Should he be in-default, from the time-of judicial or extrajudicial demand for the payment of the price. The buyer may suspend the payment of the price (1590) 3. There is @ well grounded fear (fundado temar) b. The fear is because of: L.. A vingicatory action or action to recover 2. A foreclosure of mortgage a The fear must not be the result of any other ground b. A mere act of trespass is made by one claiming no legal right whatsoever. Should the vendor. have reasonable grounds to fear the loss of immovable property sold and its price, he may immediately. sue for the rescission of the sale. (1591) Art, 1592. In the sale of immovable property, even though it may have-been stipulated that upon failure to pay the price at the time agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after the expiration of the period, as long as.no demand for rescission of the ‘contract has been made upon him either judicially or by @ notarial act. After the demand, the court may not grant him a new term, (1592) With respect to movable property, the rescission of the sale shall of right take place in the interest of the vendor, if the vendee, upon the expiration of the period fixed for the delivery of the thing, should not have appeared to receive it, or, having appeared, he should not have tendered the price-at the same tim unless a longer-period has been stipulated for it payment. (1593) XTINGUISHMENT OF SALE Conventional redemption - that which takes place when vendor reserves the right to purchase the thing sold with the obligation to reimburse to the, vendee the price of the sale, expenses of the contract, other legitimate payments made by reason of the sale, as well as necessary and useful expenses on the thing sold (Arts. 1601, 1616, CC). Instances where CONVENTIONAL REDEMPTION is PRESUMED to bean EQUITABLE MORTGAGE 1. Price of sale is unusually inadequate; 2. Vendor remains in possession as lessee or otherwise; 3. Another instrument extending period of | Wa “rescission bec: redemption or granting _a new period is executed; 4. Purchaser retdins part of the purchase price; 5. Vendor bounid to pay taxes; 6. Real intent is to secure the payment of a debt or performance of other obligation (Art. 1602, CC); and 7. When there is doubt as to whether the contract is "@ contract of sale with right to repurchase or an equitable mortgage (Art."1603, CC). Legal redemption - the right to be subrogated upon the same terms.and conditions stipulated in the ge 8 oF 19 ind TRAINING CENTER, INC. has not yet been perfected: {has already been www. prte.com.ph contract in the place of one who’acquires a thing by purchase or dation in payment, or by any other transaction whereby ownership is transmitted by onerous title (Art. 1619, CC) a. A co-owner of a thing may exercise the right of redemption in case the shares of all the other co- owners or of any of them, are sold to a third Person. If the price of the alienation is grossly excessive, the redemptioner shall pay only a reasonable one. (1620) b. Should two or more co-owners desire to exercise the right of redemption, they may only do so in Proportion to the share they may respectively have inthe thing owned in common ©. The owners of adjoining lands shall also have the right of redemption when a piece af rural land, the area of which does not exceed one hectare, is aiignated, unless the grantee does not own any rural lang. (1621) This right is not applicable to adjacent lands which are separated by brooks, drains, ravines, roads and other apparent servitudes for the benefit of other estates. If two or more adjoining owners desire to exercise the right of redemption at the same time, the owner of the adjoining land of smaller area shail be preferred; and should both lands have the same area, the one who first requested the redemption d. Whenever a piece of urban land which is so small and so situated that @ major portion thereof cannot be used for any practical purpose within a reasonable time, having been bought merely for speculation, is about to be re-sold, the owner of any adjoining land has a right of pre-emption at a reasonable price If the re-sale has been perfected, the owner of the adjoining land shall have a right of redemption, also at a reasonable price. When two or more owners of adjoining lands wish to exercise the right of — pre-emption or redemption, the owner whose intended use of the land in question appears best justified shall be preferred. (1622) ©. The right of ‘legal pre-emption or redemption shall not be exercised except within thirty days from the notice in writing by the prospective vendor, or by the vendor, as the case may be, ‘The deed of sale shail not be recorded in the Registry of Property, unless accampanied by an affidavit of the vendor that he has given written notice thereof to ell possible redemptioners. The right of redemption of co-owners excludes that of adjoining owners. (1623) I The Sele to a third person") The Sale to a f sale_as yet e i Lee The action here is directed | Action against the prospective | the buyer eller AGENCY By the contract of agency @ person binds himself te render some service or to do something in representation ‘or 99 behalf of another, with the consent or authority of the latter. (1868) Characteristics of a’contract of agency i. Consensual 2. PrincipalFDIEEESSTONAL REVIEW and TRAINING CENTER, IN 3. Nominate 4-,Unilateral ~ if gratuitous / Bilateral = if for compensation’ 5. Preparatory + Agency is presumed to be for a compensation, unless there is proof to the contrary. (1875) Essential elements of agency 1. Consent, express or implied 2. Object is the execution of a juridical act in relation to third persons, 3. Agent acts as @ representative and not for himsetr 4. Agent acts within the scope.of his authority, Agency distinguish from similar contracts 1. Loan ~ given to borrower as owner 2, Lease of service - It'is employment and the servant only perform.ministerial function 3. Independent contract ~ Not subject to control and direction as 0 the method and means except te the result. 4. Partnership ~ partner act for the partnership, partner and es principal for himself. 5. Negotiorum gestio - act to the presumed will of the owner, no authority and it is a quasi contract. Form of Agency * Agency may be oral, unless the law require: specific form. (1869) * | When @ sale of a piece of land or any interest therein is through ‘an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void (s74) + Kinds of agency 2. Manner of its creation 1. Express - actually. authorized either oral or writing 2. Implied ~ a. From the-acts of the principal b. From his silence or lack of action ar ©, Failure to repudiate the agency, knowing that another person is acting on. his behalf without authority b. Its character 1. Gratuitous 2. Compensated or onerous ¢. Extent of business covered 1. General ~ comprise all the business 2 Special - comprise one or more specific transactions, 4g. Authority conferred 8. Couched in general terms - created in general term and comprised only ect oi administration: b. Couched in specific terms - authorize only specific act or acts Nature and effects 1. Ostensible or representative - agent acts in the name and representation of the principal. 2. Simple or Commission ~ agent acts for the account of the principal but in his own name. a +. Acceptance (1870) 1. Express 2. Implied a. From his acts which carry out the agency, ar b. From his silence or inaction eccording to the circumstances © Between persons who are present, the acceptance of the agency may also be implied if the principal delivers his power of attorney to the agent and the latter receives, it without any objection. (1871) C. . Between persons who ane absent (1872) 1. When the principal triansmits his power of attorney to the agent, who receives it without any objection; 2. When the principal entrusts to him by letter or telegram: a pxwer of attorney with respect to the business in which he is habitually engaged as .3n agent; and he did not reply to the letter or telegram. An agency is either (1876) 1. General - ail the business of the princig'al a 2. Special ~ one or more specific transaction: a b An agency couched in general terms comprises only acts of administration, even it’ the principal should state that he withholds no ower or that the agent may execute such acts as he may consider eppropriate, or even though the agency should authorize a general and unlimited management. (1877) A special power to sell excludes the power to mortgage; and a special power to mortgage does not include the power to sell. (1879) A special power to compromise does not author submission to arbitration. (18 80) Special powers of attorney are necesseiry in the following cases: 1, To make such payments as arg_not’ usually, “considered ag acts oF administration; 2. To effect _novations which put an end to obligations already in existence at the time the agency was constituted; 3. To eemscomise, (0 submit questions to arbitration, to rencunce the right to appeal from a judgment, to.waive objections to the: venue ‘of an action or to abandon 2 prescription alreaoy acquired; 4. Tywaive any obligation gratuitously; 5. To enter into any contract by which the ‘ovinership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration; 6. To make gifts, excest customary ones for charity or those made to employees in the business managed by: the agent; 7. To loan or borrow money, unless the iatter act be urgent and indispensable for the Preservation of the things which are under administration; 8. To lease any real property to another f-erson for more than one yea 9. To bind the principal to render some service without cornpensation; 10. To bind the principal in a contract of partnership; 11, To obligate’ the principal as a guarantor or surety; 12. To create o- convey ‘reat rights over isnmovable property; 13. To accept or repudiate an inheritance; 14. To ratify or recognize obligations coritracted before the agency; 15. Any other act of strict dominion. + Scope’of authority a b, The agent must act within. the scop2-of his authority. He may do such acts as may be conducive to the acce:mplishment of the purpose of the agency. (1881) ‘The limits of the agent's authority’ shall*not be Considered exceeded should it have been performed in a manner. more advantageous to the principal than that specified by him. (1882) If an agent acts in his own-name, the principal BL.505PROFESSIONAL REVIEW and TRAINING CENTER, INC has no right of action against the persons with whom the ‘agent has contracted; neither have Such persons against the principal In such case the agent is the one directiy bound in favor of the person with whom he has contracted, as if the transaction were his awn, except when the contract involves things belonging to the principal. ‘The provisions of this article shall be understood to be without prejudice to the actions between the principal and agent. (1883) If a person specially informs another or states by public advertisement that he has given a power of attorney to a third person, the’ latter thereby becames a duly. authorized agent, in the former case with respect to the person who received the special information, and in the latter case with regard to any person, ‘The power shall continue to be in full force until the notice is rescinded in: the same manner in which it was given DBLIGATIONS OF THE AGENT ‘The agent is bound by his atceptance to carry aut the agency, and is liable for the damages which, through his non-performance, thé principal may suffer. He must also finish ‘the business already beaun on tiie death of the principal, should delay entail any danger. (1884) In case @ person declines’an agency, he is bound to observe the diligence of a.good father of a family sa the custody and preservation of the goods forwarded to him by the owner until the latter should appoint ar agent or take chargé.of the goods. (1885) Should there be a stipulation that the agent shall advance the necessary Funds,:he'shall be bound to do SO except when the principal is insolvent. (1855) Jn the execution of the agency: a. The agent. shall actin acrordance.with_ the instructions af the principal 1. The agent who acts as such is not personally liable to the. party with: whom he contracts. unless he expressly binds himself or exceads the limits of his authority without giving such party sufficient notice of his powers. (1857) 2. If the agent contracts in the name of the principal, exceeding ‘the scope of his authority, and the principal does not ratify the: contract, it shall be void if the party with whom the agent contracted is aware of the limits of the powers ‘anted by the principal, in this case, however, ‘the-agent is liable if he undertook to secure the principal's ratification. (1898) "3. Ifa duly authorized agent acts in accordance with the orders: of the principal, the latter cannot set up the ignorance of the agent as to circumstances whereof he himselt was, or ought to have been, aware. (1399) b. In default of instruction, he’ shall dé ali that 2 good father of a family would do, as renuired by the nature of the business. (1877) €. An agent shall not carry ‘out an agency if its execution would manifestly result in loss or damage to the principal. (1838) ‘The agent shall be liable for damages if, there being @ conflict between his interests and those of the Principal, he should prefer his own. (1899) If the agent has been empowered @ To borrow money - he may himself be the lender at the current rate of interest. D. Authorized to lend_money at interest - he cannot borrow it without the. ‘consent of the ge 10 of 19 ~wonoricicom’ph” principal. (1890) Every agent is bound to render an account of his transactions and to deliver to the principal whatever he may have.received by vietue of the agency, even though it may not be owing to the principal. Every stipwation exempting the “agent _from the obligattion te render an account shall be void. (1881) The agent may appoint a substitute if the principal has not prohibited him from doing, so; but he shall be responsitje for the acts of the substitute: 1 'When ne was not given the power to appoint one; 2, When ne was given such power, but without designating the person, and the person appointed was notoriously incompetent or insolvent. All_acts of the substitute appointed against the prohibition of the principal shall be void. (1892) The princival may furthermore bring an action against’ the substitute with respect to the obligations which the atter has contracted under the substitution. (1893) ‘The responsibility of two or more agents: a. Solidarity as not been expressly stipulated. (1894) ~ Liability is only joint ». Solidarity has been agreed upon - each of the agents is responsible forthe non-fulfillment of agency, and for the fault. or negligence of his fellows agents Exception: When the fellow agents acted beyond the scope of their authority. (1895) The agent owes interest on the sums he has applied to his own use from the day on which he did so, and on those which he still cwes after the extinguishment of the agency. (1895) So far as..thicd-persons~are”concerned, an act is deemed to have been performed within the scope of the agent's authority, if such-act is within the terms of the power of attorney, as written, even if the agent has in fact exceeded the limits of his authority according ta.an.und2rstanding between the principal and the agent. (1900) & third person cannet set up the fact that the agent has exceeded his pewers.. if the.principal has ratified, or has signified his~willingyness to ratify the agent's acts. (1801) - aan A third person with whom the agent wishes to contract on behalf of the principal may require the presentation of the power cf. attorney, or the instructions as regards the egency: Private or secret orders and instructions of the principal do not prejudice third persons who have relied upon the power of attorney ar insiructions shown them (1902) The commission agent . Shall be responsible for the goods received by him in the terms and conditions: and as described in the consignment, unless upen receiving them he should make a written statement of the damage and deterioration suffered by the same. (3903) b, Shall “distinguish them by countermarks, and designate the merchandise respectively belonging to each principal when he handles goods of the same kind end mark, whicl: belong to different owner. (1804) To sell on credit a. Without the express or implied consent of the orincigal - the principal may demand from him payment in cash, tut the commission agent shall be entitled to any interest or benefit, which may result fron such sale. (1905) b. With. euthority. of the principal_- He shall so inform the principal, with 9 statement of the ~ BL.505Sn EY and TRAINING CENTE Hames of the buyers. Should he fail todo so, the sale shall be deemed to have been made far cash insofar as the principal is concerned. (1905) + Should the commission agent receive on a saie, in addition to the ordinary. commission. another called 3 guarantee commission, he. shall bear the risk of Collection and shall pay the principsl the proceeds of the sale on the same terms agreed upon with the purchaser. (1907) + The commission agent who does not collect the Credits of his principal at the time when they become due and demandable shall. be Irable for damages, unless he proves that he exercised due diligence fer that purpose. (1908) +The agent is responsible nat only for fraud, but also for negligence, which shall be judged with more or less rigor by the courts, according to whether the ‘agency was or was not for a compensation. (1909) OBLIGATIONS OF THE PRINCIPAl. 1: The principal must comply witti all the obligations which the agent may have contracted within the Scone of his authority. (1910) If the agent “has exceeded his power, the principal Is not bound except when hie ratifies it expressly or tacitty. 2. To be soliderily tiable with the agent if the former allowed the latter to act as though he had full powers even when the agent has exceeded his authority (911) 3. The principal must advance to the agent, should the letter so request, the sums necessary for the execution of the agency. Should the agent have advanced them, the principal must reimburse (interest on the sums advanced, irom the day on which the advance was made:) him therefor, even if the business or undertaking was not successtui, Provided the agent is free from all fault. (191 4. The indemnify the agent for all the damages which the execution of the agency may have rcaused the Ietler, without fauit or negligence on his part. (1913) Exception: The principal is not-liable for the expense by the agent in the following cases: (1918) a. If the agent acted in contravention of the Principal's instructions: except when the principal wish to avail himself of the benefits cerived from the contra b. The expenses were due to the fault of the agent; ©" The agent incurred them with knowledge that an unfavorable result ‘would ensue and the principa: was not aware thereof; ¢- When it was stipulated ‘that the expenses would be bore by the agent, or that the latter vould be allowed oniy a certain sum £ The agent may retain in pledge the things which ere the object of the agency until the principal effecis the feimbursement and pays the indemnity set forth in the two preceding articles, (1914) + Iftwo or more persons have appointed an agent for 3 common transaction or undertaking, they shall be Solidarity llable to the agent for all the consequences of the agency. (1915) “When two persons contract with regard to the same thing, one of them with the agent and the other with the principal, and the two contracts are incompatibie with each other, that 6f prior date shall be preferred, without prejudice to the provisions of article 1544 (double sate). (1916) + In the case referred to in agent has acted in good the preceding article, if the faith, the principal shall be able In damages to the third person whose contract must be rejected. If the agent acted in bad faith, he » lone shall be responsible. (1917) Page 11 of 19 www.prtc. com. al R, INC. . ae MODES OF EXTINGUISHMENT. OF «AGENCY ‘Agency is extinguiished by: (1919) 1. Revocation 7 2. The principal may revoke thie agency at will, a compel the agent to return the decurne evidencing the agency (19.10) When two or ro Principals have granted a povier of attomey for common transection, any one of them m: revoke the same without the consent of t others. (1925) 1. If the agency has been entrusted for t purpose cf contracting with specifica! persor its revocation shall not prejudice the latter they were not giv.2n notice thereof. (1921) 2. An agency cannoi’s be revoked if 2’ bilater contract depends u pon it, or if it is the meas of fulfilling an oblijeticn’ already ciontracte or if @ partner is appointed manager of Partnership in the contract. of partnershi)9 ar his removal from "the managemenit unjustifiable. (1927) Such revocation may be express o+ imp lied. (1920) 2. Express b. Implied 1. "The appointment of a new agen” for th same business or transaction revo, “eS th Previous agency from: the day an whic notice ‘thereof was given to the for,"€ agent, without prejudice to the provisions .” the two preceding articles. (1923) 2. The agency is revoked if the princiyzal directly manages the business entrusted to the agent, dealing directly with third persons. (1924) 3. A general power of attorney is revoked by a special one granted to another agent, as regards the special matter involved in’ the latter. (1926) Withdrawal of the agent 2 The agent may withdraw from the agency by giving due notice to the principal. If the latter should suffer any damage by reason of tha withdrawa!, the agent must indemnify him therefor, unless the agent should base his with¢rawal upon the impossibility of continuing the performance of the agency without grave detriment to himself.-(1928) 5. The agent, even if he should withdraw from the agency for a valid reason, must continue to act until the principal has had reasonable opportunity to take the necessary steps to meet the situation, (2329) 3. The death, insanity, civil interdiction _or insolvency (BNET) of the principal or of the agent: Hf the agent dies, his heirs must notify the principal thereof, and in the meantime adopt Such measures" as the circumstances “may demand in the interest of the latter. (1932) 5. The agency shali remain in full force and effect even after the death of the principal, if it has been constitured in the common interest of the latter and of the agent, or in the interest of third person wo has accepted the stipulation in his favor. (1930) Anything done by the agent, without knowledge of the death of the principal or of any other cause which extinguishes: the agency, is valid and shall be fully effective with respect to third persons whé may have contracted with him in good faith, (1931) 4 he dissolution of the. firm or corpération which entrusted or accepted the agency,PROFESSIONAL RI 5. The accomplishment of the object or eurpose of the agency; 6. The expiration of the period for which the agency was constituted. (1732a) CREDIT TRANSACTIONS thing Ownership “is” transterced to the borrower, wnership retained by the | lender _ _ . Essentially gratultous |-Gratuitous or onérous Borrower must return the} Borrower pay only the same object | same amount of the same { kind and quality _ a Only personal property”! involve real or personal property - Bailor may demand the! Lender may not demand return of the thing loan in j the return before the certaig circumstances | lapse of the term agreed The loss is suffered by the | The borrower suffers the’! pallor i loss. Commodatum - oné of the parties delivers to another, either something not consumable so that the latter may se the same for a certain time and return it. >. ° Essentially’ gratuitous, if any compensation is to be paid by him who ‘acquires the use, the contract ceases to be e commodatum. (1935) Ballor retains the ownership “of the thing toaned. Hence, the bailor in commodatum need not be the owner of the thing loaned. (1938) The bailee in commodatum acquires the used of the thing loaned but not its fruits. (1935): However, a stipulation that the bailee may make use of the fruits of the thing loaned is valid. (1940) i. Consumable goods. may be the subject of commodatum if the purpose of the contract is not the ‘consumption of the object, 25 when it is merely far exhibition, (1936) . Movable or immovable property. may be the object of commodatum. (1937) Commodatum is purely personal in’ character. Consequently: 1, The death of either the, bailor or the bailee extinguishes the contract; 2. The. bailee can neither lend nor lease the object of the contract to a third person. However, the members of the bailee's household may make use of the thing’ loaned, “unless there is a stipulation to the contrary, or unless the nature of the thing forbids stich use. bligations of the Bailee The bailee is obliged to: pay for the ordinary nses for the use’ and preservation of the thing loaned. (1941). However, the bailee dues not answer for the deterioration of the thing loaned due only to the use thereaf and without his fault, (2943) The bailee is liable for the loss of the thing, even if it should be through a fortuitous event: (1542) 1. If he devotes the thing to any purpose different from that for which it has been loaned; (Bad, faith) 2, If he keeps it longer than the period stipulated, or after the accomplishment of the use for which the commodatum has been constituted; (Delay) If the thing loaned has been delivered with appraisal of its value, unless there is 2 stipulation exemption the bailee from responsibility in case Of 2 fortuitous event; (appraisal) ige 12 of 19 wiww.prtc, EVIEW and TRAINING CENTER, .com.ph 4. If he. lends or leases the thing to a third person, who is not @ member of his household; (strictly personal) 5. If, being able to save either the thing borrowed or his own thing, he chose to save the latter (ingratitude) + The bailee cannot, retain the thing loaned on the ground that the bailor owes him something, even though it may be by reason of expenses. (1944) However, the bailee has a right of retention for damages when the bailor who, knowing the flaws of the thing loaned, does not advise the bailee of the same, shall be liable to the latter for the damages which he may suffer by reason thereof. (1951) + When there are two or more bailees to whom @ thing is leaned in the same contract, they are liable solidarity. (1945) Obligations of the Bailor + The bailor cannot demand the -return of the thing loaned till after the expiration of the period stipulated, or after the accomplishment of the use for which the commodatum has been constituted. However, if in the meantime, he should have urgent need of the. thing, he may demand its return or temporary use. In case of temporary use by the bailor, the contract of commodatum is suspended while the thing is in the possession of the bailor. (1946) + The baller may demand the thing at will, and. the contractual relation is called’ a precarium, in the following cases: (1947) 1. Ifncither the duration of the contract nor the use to which the thing loaned should be devoted, has been stipulated; or 2. If the use of the thing is merely tolerated by the owner. + The bailor may demand the immediate return of the thing if the bailee commits any of the following act of ingratitude: (1948) 1. If the donee should commit some offense against the person, the honor-or the property of the donor, or of his wife cr children under his parental authority; 2. If the donee imputes to the donor any criminal offense, or any act involving moral turpitude, even though he should prove it, unless the crime or the act has been committed against the donee himself, his wife or children under his authority; If he unduly refuses him support when the donee is tegally or morally bound to give support to the donor + The bailor shall refund the extraordinary expenses during the contract for the preservation of the thing loaned, provided the baile brings the same to the knowledge of the bailor before incurring them, except when they dre so urgent that the reply to the notification cannot be awaited without danger, If the extraordinary expenses arise. on the occasion of the actus! use of the thing by the baile, even though he acted without fault, they shall be borne equally by both the bailor and the bailee, unless there is a stipuiation to the contrary. (1949) + The bailor cannot exempt himself from the’ payment of expenses or damages by abandcning the thing to the ballee. (1952) Simple loan or mutuum - one of the parties delivers to another money or other consumable thing, upon the condition that the same amount of the same kind and quality shail be paid. However, A contract whereby one person transfers the ownership of non-fungible things to another with the obligation an the part of the latter to give things of the same kind, quantity, anc quality shallNAL REVIEW and TRAI be considered a barter, (1954) 4. Fixed, savings, and current deposits of money in banks and similar institutions shall be governed by the provisions-concerning simple loan. (1880) b. Gratuitous or with a stipulation to pay interest (1933) §- Ownership passes to the borrower - A person who feceives @ loan of money or any other fungible thing acquires the ownership thereof, and is bound to pay to the creditor an equal amount of the same kind and quality. (1953), If what was loaned is a fungible thing other than money, the debtor owes another thing of the same kind, quantity and quality, even if it should change in value. In case it is impossible to. deliver the same kind, its vaiue at the time of the perfection of the loan shall be paid. (1955) No interest shall be due unless it has been expressly stipulated in writing. (1956) If the borrower pays interest when there has been no stipulation therefor, Solutio indebiti, or natural obligations shall be applied, as the case may be. (1960) Contracts and stipulations, under any cloak or device whatever, intended to circumvent the laws against bsury shall be void. ‘The borrower may recover in accordance with the laws on usury. (1957) 4g. In the determination of the interest, if it is payable in Kind, its value shall be appraised at the current price OF the products or goods-at the time and place o payment. (1958) he Interest due and unpaid shall not earn interest However, the contracting parties’ may by stipulation capitalize the interest due and unpaid, which as added principal, shall earn new interest. (1959) However, Interest:due shall earn legal interest rom fhe time it is judicially demanded, although the Obligation may be silent upon this point (2212) '-. Usurious contracts shall be governed by the Usury Law and other special iaws, so far as they are not inconsistent with this Code: (1961) + An accepted promise to deliver something by way of Commodatum or simple: loan is binding upon parties, but the commodatum or simple loan itself shall not be perfected until the delivery of the object of the contract DEPOSIT (Not included in the CPA Board Exam) A deposit is constituted from the moment a person receives a thing belonging to another, with the obligation of safely keeping it and of returning the same. If the Safekeeping of the thing delivered is not the principal Purpose of the contract, there-is no deposit but some other contract. (1962) + An agreement to constitute a deposit Is binding, but the deposit itself is not perfected until the delivery of the thing. (1963) 1. A deposit is a gratuitous contract,,except when there is an agreement to. the contrary, or unless the depositary is engaged in the-business ‘of storing goods. (1965) * Only movable things may be the object of a deposit (1986) + Kings of deposit (1759) 1 Judicially 2. Extrajudiciatly. (1967) 2. Voluntary b. Necessary. VOLUNTARY DEPOSIT * A contract of deposit may be entered into orally or in writing. (1969) 7A Noluntary deposit is that wherein the delivery is rade by the will of the depositor. A deposit may sic be made by two or more persons each of whos Page 13 of 19 NG CENTER, INC. | believes himself entitled to the thing deposited with : third person, who shall defiver it in a proper case t the one to whom it belongs. £1968) If a person having capacity to contract accepts ¢ deposit made by one who is incapacitated, the forme: shall be subject to all the obligations of a depositary, and may be conpsiled to return the thing .by ths guardian, or administrator, of the person who made the deposit, or by the latter himself if he should acquire capacity. (1970) Hf the deposit has heen made by a capacitated person with another who is not, the depositor shall only have an action to recover the thing deposited while it is still in the possession of the depositary, or to compel pe latter to pay him the amount by which he may have enriched or benefited himself with the thing or ts price. However, if a third person who acquired the thing acted in bad faith, the depositor may bring-an action against him for its recovery. (1971) Obligations of the Depositary The depositary is obliged to keep the thing safely and to return it, when required, to the depositor, or to his heirs and successors, or to the person who may have been designated in the contract. His responsibility, with regard to the safekeeping and the loss of the thing, shali be governed by the provisions of Title I of this Book. If the deposit is gratuitous, this- fact shall be taken nto account in determining the-degree of care that the depositary must observe. (1972) Unless there is a stipulation to the contrary, the depositary cannot deposit the thing with a ‘third person. If deposit with a third person is allowed, the depositary is liable for the loss if he deposited the thing with a person who is manifestly careless or unfit. The depositary is responsible for the negligence of his employees. (1973) The depositary may change the way of the deposit if under the circumstances he may reasonably resume that the depositor would consent to the change if _he knew of the facts of th; situation. However, before the depositary may make such change, he shall notify the depositor thereof and wait for his decision, unless dela: would cause danger. (1974) The depositary holding certificates, bonds, securities or instruments which earn intere: shall jound to collect the fatter when _i becomes due, and to take such steps as may be necessary in order that the secuirities may preserve their value and the rights corresponding to them according to jaw. The above provision shall not appl for the rent of safety deposit boxes. (1975) Unless there is a stipulation to the contrary, the depositary may commingle grain or other articles of the same kind and quality, in which case the verious Gepositors shall own or have a proportionate interest. in the mass. (1976) The depositary cannot -make’ use of the thing Geposited without the express: permission of the Gepositor. Otherwise, he shall be liable for damages. However. when the preservation of the thing deposited requires its use, it must be used but only for that purpose. (1977) When the depositary has germission to use the thing deposited, ‘the contrect loses the concept of deposit and becomes a loan or commodatum, ‘xcept where safekeeping is still the principal to contracts urpose of the contract. The permission shall not be presumed, and its existence must -be proved (2978) The depositary is liable for the loss of the thingPROFESSIONAL REVIEW and TRAINING CENTER through a fortuitous event: (1979) 1. Ifitis so stipulate; 2. If he uses the thing without the di Permission; If he delays its return; If he allows others to -use it, even though he himself may have been authorized to use same, + When the thing deposited is delivered closed and Bw sealed, the depositary must cetucn_it in the. sane condition, and he shall be liable for damages should the seal or lock be broken through his fault. Fault on he part of the depositary is presumed, unless there is proof to the contrary. AS regards the value of the thing deposited, the statement of the depositor shall_be accepted, when the forcible Opening is imputable to the depositary, should there be no proof to the contrary. However, the courts may ass upon the credibility of the depasitor with respect to the value claimed by him. When the seal or lock is_broken, with or without the depositary's fault, he shall keep the secret of the deposit. (1981) + When it becomes necessary to open a locked box or receptacle, the depositary is presumed authorized to Go $0, if the key has been delivered to him; or when the instructions of the depositor as regards the deposit cannot be executed without opening the box or receptacle, (1982) + The thing deposited shall be returned with all its products, accessories and accessions. Should the deposit consist of money, the provisions relative to agents in article 1886-shall be applied to the depositary. (1983) + The depositary cannot demand that the depositor prove his ownership of the thing deposited, Nevertheless, should he ‘discover that the thing has been stolen and.who its true owner is, he must advise the latter of the deposit. If the owner, in spite OF such information, does not claim it within the period of one month, the depositary shail by relieved of all responsibility by returning the thing deposited to the depositor. IF the depositary has reasonable grounds to believe that the thing has not been lawfully acquired by the depositor, the former may return the same. (1983) * When there are two or more depositors, if they are not solidary, and the thing admits of division, each ‘one cannot demand more than his share. When there is: solidarity or the thing does not admit of division, the provisions of articies 1212 and 1214 shall govern However, if there is a stipulation that the thing should be returned to one of the depositors, the depositary shall return it only to the person designated. (1985) If the depositor should lose his capacity to contract after having made the deposit, the thing cannot be returned except to the persons who may have the administration of his property and: rights. (1986) If at the time the deposit was made a place was esignated for the return of the thing, the depositary must. take the thing deposited to such place; but the expenses for transportation sivall be borne by the depositor, If no place has been designated for the return, it shall be made vihere the thing deposited may be, even if it should nat be tie same place where the’ deposit was made, provi that there was no malice on the part of the depositary. (1987) The thina deposited must be returned to the ositor upon demand, even though 3 specified period or time for such return ma have been fixed. This provision shall not api when the thing is judicially attached while in the age 1407 19 pu Drtc.com, depositary’s possession, or should he have. been notified of the opposition of a -third person ta the return or the removal of the thing deposited. In these cases, the depositary must immediately inform the depositor of the attachment or opposition. (1988) + Unless the deposit is for a valuable consideration, the depesitary who may have justifiable reasons for not keeping the thing deposited may, even before the time designated, return it to the depositor; and if the latter should refuse to receive it, the depositary may secure its consignation from the court, (1989) + If the cepositary by force majeure or government order loses the thing and receives money or another thing in its place, he shall deliver the sum or other thing to the depositor. (1990) + The depositor’s heir who in good faith may have sold the thing which he did not know was deposited, shall only be bound to return the. price he may have received or to assign his right of action against the buyer in case the price has not been paid him. (1991) Obligations of the Depositor + If the deposit is gratuitous, the depositor is obliged to reimburse the depositary for the expenses he may have incurred for the preservation. of the thing deposited. (1992) + The depositor shall reimburse the depositary for any loss arising from the character of the thing deposited, Exception: a. Unless at the time of the-constitution of the deposit the former was not aware of, &. Was not expected to know the dangerous character of the thing, c. He notified the depositary of the same, d. The depositary was aware of it without advice from the depositor. + The depositary may retain the thing in pledge until the full payment of what may be due him by reason of the deposit. (1994) + Adeposit its extinguished: (1995) (2)'Upon the loss or destruction of the thing deposited; (2) In case of a gratuitous deposit, upon the death of either the depositor or the depositary, NECESSARY DEPOSIT + Adeposit is necessary: (1965) (1) When it is made in compliance with a legal obligation. It shall be governed by the provisions of the law establishing it, and in case of its deficiency, by the rules on voluntary deposit. (1997) When it takes place on .the occasion of any calamity, such as fire, storm, flood, pillage, shipwreck, or other similar events. {t’ shall be regulated by the provisions concerning voluntary deposit end by articie 2168, Art, 2168. When during a fire, flood, storm, or other calamity, property is saved from destruction by another person without the knowledge of the owner, the latter is bound to pay the former just compensation. + The deposit of effects made by the travellers in hotels or inns shall also be regarded as necessary. The keepers of hotels or inns shall be responsible for them as depositaries, provided that notice was given to them, or to their employees, of the effects brought by the guests’and that, on the part of the latter, they teke the precautions ‘which said hotel-keepers or their substitutes advised relative to the care and vigilance of their effects. (1998) + The hotel-keeper is liable far the vehicles, animals “BL.505