CPA REVIEW SCHOOL OF THE PHILIPPINES

Manila

Regulatory Framework and Business Transactions July 27, 2024

Batch 96 – First Pre-Board Examination Saturday 1-4pm
Instructions:
Choose the BEST answer for each of the following items. Mark only one answer for each item on the
Special Answer Sheet provided. Strictly no erasure allowed.

1. If a third person voluntarily paid the obligation of the debtor which has prescribed, which of the
following is correct?
a. The third person can recover from the debtor the amount paid to the creditor.
b. The third person is subrogated to the rights of the creditor.
c. The third person can recover from the creditor the amount paid.
d. Answer not given

2. Using the same facts in no.1, but there is no prescription yet, which of the following is correct?
a. The third person can recover from the debtor the amount paid to the creditor.
b. The third person is subrogated to the rights of the creditor.
c. The third person can recover from the creditor the amount paid.
d. Answer not given

3. If the parties stipulate for a degree of care to be observed which is different from what the law
provides, which of the following is correct? The degree of care which the parties should observe is,
a. What the law so provides
b. What the parties so stipulated
c. Diligence of a good father of a family
d. Answer not given

4. In an obligation is with a penal clause, and if on due date the creditor demands, but the debtor fails,
which of the following is correct?
a. The debtor should give the penalty and it is in lieu of interest, damages and there is no need to
fulfill the obligation
b. The debtor should give the penalty and it is in lieu of interest and damage but there is a need to
fulfill the obligation
c. The debtor should give the penalty, the interest, and damages because the debtor is in delay.
d. Answer not given

5. Which of the following creates a valid obligation?

a. I promise to give you ₱5k monthly, If I will eat ice cream tomorrow.
b. I will have sex with you this coming Sunday or If I want I will run naked along Roxas Blvd.
c. I will give you 2 kilos of shabu or I will kill your enemy
d. I will give you my only car and If I fail I will have sex with you for one month.

6. If the debtor effects payment of his obligation to the brother of the creditor, which of the following is
correct?
a. The payment extinguishes the obligation of the debtor.
b. The debtor can recover from the brother the payment made
c. The payment is void because it will not extinguish the obligation of the debtor
d. Answer not given
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7. A, B, C, and D are debtors and W, Y and Z are the creditors, The sharing in the ₱30,000 obligation,
among ABCD is 1:2:3:4 while among the creditors it is 2:3:5. If the contract further provides that; A
will pay if Y will pass the Oct 2025 CPALE, B will pay on Dec 25, 2024, C will pay on Jan 15, 2025
and D will pay on Feb 14, 2025.
If today is Dec 25, 2024. How much and from when can Y collect if the debtors are solidary but the
creditors are joint?
a. A - ₱3,000
b. B - ₱6,000
c. C - ₱0
d. D - ₱1,800

8. Using the same facts in no. 7 but the debtors are solidary and the creditors are solidary, How much
and from whom can W collect?
a. A - ₱1,500
b. B - ₱3,000
c. C - ₱4,500
d. D - ₱6,000

9. A obliged himself to give to B his only horse or his only carabao on July 4, 2024. On June 30, 2024 A
intentionally killed the horse, which of the following statement is correct, if the right of choice
belongs to B?
a. The obligation is converted to a simple obligation.
b. A should pay the value of the horse plus damages
c. The obligation of A is extinguish if A delivers the carabao.
d. B can demand the delivery of the carabao but B cannot recover damages

10. If the debtor effects fulfillment of the obligation before its maturity, and the creditor accepts, which
of the following statements is correct?
a. The debtor can recover the object of the obligation without interest and fruits.
b. The debtor can recover the object of the obligation plus interest and fruits.
c. The debtor cannot recover anything because there was a waiver of the benefit of the period.
d. Answer not given

11. In an obligation to give, If there is no stipulation as regards the place of performance, where should
the obligation be fulfilled?
a. At the location of the object at the time the obligation is constituted.
b. At the location of the object at the time the obligation becomes due
c. At the residence or domicile of the debtor.
d. Answer not given

12. The maximum recoverable amount of a depositor in a closed bank is

a. The amount of his deposit
b. The amount recoverable from PDIC which is ₱500,000
c. The amount of his deposit or the PDIC limit of ₱500,000 whichever is lower
d. Answer not given

13. If the debtor effects tender of payment but the creditor rejects, and the debtor effects consignation,
which of the following statements is correct?
a. The obligation of the debtor is extinguished
b. The debtor can recover the object deposited to the court even without the consent of the creditor.
c. The debtor can recover the object deposited to the court if the creditor consents.
d. Answer not given
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14. If there is a security given by the debtor to secure the fulfillment of the obligation, but the security is
impaired or is lost, which of the following statements is correct?
a. The debtor is deprived of the benefit of the period
b. The debtor should give another security which is equally satisfactory
c. The debtor cannot be compelled to fulfill the obligation yet, because the period is for the benefit
of both the debtor and creditor.
d. Answer not given

15. A owes B ₱20,000 due on August 1, 2024. On the other hand B owes A 4 debts, as follows:
Debt 1 - ₱7,000 due on August 2, 2024, Debt 2 - ₱6,000 due on August 4, 2024, Debt 3 - ₱5,000 due
on August 6, 2024, Debt 4 - ₱4,000 due on August 8, 2024, B also owes C ₱20,000 due on August 1,
2024. On August 2 2024 C demands payment. As a consequence, B assigns to C, A’s obligation to B.
Later, on August 6, 2024, C inform A. about the assignment of A’s obligation to B. A objects on the
ground the B’s obligation to him is greater than his obligation. How much can C collect from B?
a. Nothing
b. ₱20,000
c. ₱7,000
d. ₱2,000

16. If a third person offers to pay the obligation of the debtor when it becomes due which was accepted
by the creditor, and they further stipulate that the debtor shall be discharged from liability. If on due
date, the new debtor fails to pay, which of the following statements is correct?
a. The obligation of the original debtor is revived
b. The original debtor cannot be required to pay because his obligation was also extinguished
c. The original debtor can be required to pay if the new debtor failed to pay due to insolvency
d. Answer not given

17. Delivery of the object is not necessary for this contract.

a. Contract of loan
b. Contract of deposit
c. Contract of antichresis
d. Contract to make a commodatum

18. A contract of commodatum is

a. An onerous contract
b. A emsensual contract
c. A contract of adhesim
d. A real contract

19. If there is a substitution of debtor and subrogation of another in the place of the creditor, there is
a. Mixed novation
b. Real novation
c. Casual novation
d. Personal novation

20. A orally leased his apartment house and pieces of jewelry for 2 years to B, where B made an advance
rent payment of ₱100,000 and ₱50,000 for the apartment house and pieces of jewelry respectively.
The contract of lease is:
a. Unenforceable for both the apartment house and pieces of jewelry
b. Unenforceable for the apartment house but enforceable for the pieces of jewelry
c. Enforceable for the apartment house but unenforceable for the pieces of jewelry
d. Enforceable for both the apartment house and pieces of jewelry
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21. Solidary debtors A, B, C and D owe solidary creditor W and Y - ₱30,000. Debtors share in the
obligation is 1:2:3:4, respectively while creditors share is 1:2 respectively. If W condones the share of
A in the obligation, without the consent of Y and B is insolvent and C is a minor, On dec date Y can
collect,
a. From A- ₱30,000
b. From A- nothing
c. From C- ₱21,000
d. From D- ₱18,000

22. Using the same facts in no. 21, After Y successfully collects, Y is required to give to W his share in
the credit amounting to:
a. ₱2,000
b. ₱7,000
c. ₱6,000
d. ₱4,000

23. A, a minor sold his ring and his mother’s necklace without authority from his mother to B, of legal
age; The selling price for the ring was ₱70,000 and for the necklace was ₱180,000. The ring has
FMV of ₱100,000 and the necklace has a FMV of ₱200,000. What is the status of the contracts of
sale made by A?
a. Both rescissible because of lesion which is more than 30% of the value of the property
b. The sale of the ring is voidable but the sale of the necklace is rescissible
c. The sale of the ring is rescissible but the sale of the necklace is unenforceable
d. Both contracts are valid

24. If a valid contract is defective, which of the following is correct? The contract is
a. Rescissible
b. Voidable
c. Unenforceable
d. Answer not given

25. If the contract is without effect, which of the following is correct?

a. It cannot be ratified
b. It can be ratified and the ratification retroacts on the day the contract was perfected
c. The ratification of the contract cleanses its defects
d. Answer not given

26. If the contract is voidable, which of the following is correct?

a. It needs ratification to be enforceable
b. The parties can just ignore the contract
c. Any of the parties can ask for annulment within four (4) years from the perfection of the contract.
d. Answer not given

27. Ven sold his land to his niece – Dora a minor. The FMV of the land is ₱2m but the selling price is
₱1.5m. Two months later, Ven died, which of the following is correct?
a. The heirs of Ven can ask for rescission because of lesion which is more than ¼ valve of the
property
b. The heirs of Ven can ask for annulment on the ground that the contract is voidable
c. The parents of Dora or the heirs of Ven can ask for annulment within four (4) years from the
perfection of the contract
d. Answer not given
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28. A contract for the sale of a sweepstakes ticket to be drawn is
a. Consensual and commutative
b. Real and onerous
c. Nominate and aleatory
d. Formal and bilateral

29. The following statements are presented to you for evaluation

Statement I- Option money given by the offeree to the offeror results to a perfected contract of sale.
Statement II- Earnest money accepted by the seller makes an oral contract of sale of a piece of land
enforceable.
Statement III- In a contract for a piece of work worth ₱500 or more should be in writing to be
enforceable.
Statement IV- If a minor sells the property of his guardian without the guardian’s consent and there is
lesion of 30%, the contract is void.

In your evaluation of the statements, which of the following is correct?

a. I and II
b. II and III
c. II, III and IV
d. Answer not given

30. The employer and the employee agreed on the following:

I. The amount of the salary is different from what the law provides
II. In case of overtime work, the employee gets additional 25% of his salary
III. In case employee works on a holiday he gets additional 100% of his salary
IV. The employee is entitled to 15% night shift differential pay.

Which of the following is valid stipulation?

a. None, all stipulations are void
b. I,II,III and IV are all valid stipulations
c. III and IV are valid stipulations
d. Only II is a valid stipulations

31. If A maintains a joint account with another amounting to ₱1M in a closed bank. A may received from
the PDIC the amount of
a. ₱500,000
b. ₱250,000
c. Nothing
d. Answer not given

32. If the object of the contract of sale, did not exist at the time of the contract on July 26, 2024, which of
the following best describes the statement. The contract of sale is.
a. Valid and the contract becomes effective on the day the object comes into existence
b. Unenforceable because one of the essentials elements of a contract is missing
c. Valid, if the object comes into existence later and the contract is effective on July 26, 2024
d. Void, because the object of the contract may or may not come into existence

33. On July 4, 2024 S sold his land to B by way of Pacto de retro sale, where B is given twelve (12)
years to repurchase. Later B wants to repurchase on July 4, 2034, which of the following is correct?
a. S can repurchase even if B objects
b. The right of S to repurchase has prescribed
c. S can repurchase with or without consent of B
d. S and B should respect the period of twelve (12) years because it is mutually agreed upon
 Page 6
34. A and B entered into a contract of lease of back hoe for 2 years with an option to buy where the rent
of ₱10,000 for month will be deducted from the selling price if lessee A exercises his option to buy. A
paid the rental for 20 months, but failed to pay the rent for 21st and 22nd and 23rd months. On the
24th month lessor B repossessed the back hoe. As a consequence of the repossession.
I - B can require A to pay ₱30,000 representing the unpaid rent.
II - The contract between A and B is governed by the law on lease
III- When B repossessed the back hoe, A has no more right to recover the unpaid rent
IV- A can recover the rent paid for 20 months except if there is a stipulation to the contrary. As a
result, which of the following is correct?
a. I and II
b. I, II and III
c. II, III and IV
d. III and IV

35. If the owner of piece of land sells his land to his best friend, and there are adjoining land owners,
which of the following is correct?
a. The adjoining land owner who is first to offer to repurchase enjoys preference to repurchase the
land
b. The adjoining land owner who has the smallest land area enjoys preference to repurchase the land
c. The adjoining land owner who will be most benefited enjoys preference to repurchase the land
d. Answer not given

36. When the following has been imposed with the intention of suspending the efficacy of an obligation
to give the following rules shall be observed. Except
a. If the thing is lost, the obligation shall be extinguished
b. If the thing is improved by nature, the improvement shall inure to the benefit of the creditor
c. If the thing is improved at the expense of the debtor, he shall have no other right than that granted
to the usufructuary
d. If the thing deteriorates without the fault of the debtor, the impairment is to be borne by the
creditor

37. It is understood to be that which must necessarily come although it may not be known when
a. Passing the CPA Board Exam
b. The birth of a child
c. A priest becoming a saint
d. A day certain

38. The expenses of consignation, when properly made shall be charged against
a. The debtor
b. The creditor
c. Both the debtor and creditor
d. Neither the debtor nor creditor

39. An encumbrance imposed upon an immovable for the benefit of another immovable belonging to
another person is
a. Easement
b. Policitacion
c. Eviction
d. Injunction
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40. Statement 1- In expromission, the new debtor’s insolvency or non-fulfillment of the obligation shall
not give rise to any liability on the part of the original debtor
Statement 2- In delegacion, the insolvency of the new debtor, shall not revive the action of the
creditor against the original debtor
a. True, true
b. True, false
c. False, true
d. False, false

41. In payment of 10 grams of shabu, A made a promissory note which reads “ I promise to pay B
₱10,000. Sgd. A”. B transferred the note to C, who acted on good faith. Who will be liable to C?
a. C can collect from A
b. B can collect from A
c. C can collect from either A to B
d. C can collect from B

42. D owes C ₱6,000. No date for payment was stipulated by the parties. Which is correct?
a. C can require D to pay when the period arrives
b. C can require D to pay at anytime
c. D is not liable to C because the obligation is void there being no date of payment
d. D is not required to pay unless C goes to court and asks the court to require D to pay

43. The following items, pertain to a contract of sale, which pertains to contract to sell?
a. Ownership of the thing sold is transferred upon delivery
b. Ownership of the thing is transferred to the buyer at some future time
c. The risk of loss is on the buyer upon delivery
d. The risk of loss is on the buyer if the price is not yet fully paid

44. The following are the requisites in order that the buyer may enforce the seller’s liability in case of
eviction. Which one is not?
a. There must be a final judgement depriving the buyer of the thing sold
b. The buyer must have appealed the judgement rendered against him
c. The deprivation was based on a right existing at the time of sale
d. The vendor was given the opportunity to defend his title

45. The assessment of the amount of damages is left to the discretion of the courts, according to the
circumstances of each case, except
a. Moral
b. Exemplary
c. Temperate
d. Liquidated

46. Which of the following contracts of sale is void?

a. Where the buyer and seller are both insane
b. Where the husband aimed his gun to his wife so that his wife will sell her land to him
c. Where the buyer twisted the arm of the seller so that the seller will sign the deed of sale
d. Where the object of the contract has a redhibitory defect

47. If the animal should die after its purchase, which of the following is not a requisite to make the
vendor liable?
a. The animal dies within 3 days after its purchase
b. The disease must be redhibitory
c. The disease existed at the time of sale
d. The disease is the cause of the death of the animal
 Page 8
48. A sold his necklace to B in a public instrument and later orally sold his watch to C. Both items will
be delivered 7 days later. On the 5th day, a again sold the same necklace to D and the same watch to
E. Both D and E immediately took physical of the necklace and watch respectively and both are not
aware of the previous sale to B and C. Who will have a better right to the necklace and watch?
a. B and C
b. D and E
c. B and E
d. C and D

49. Which of the following is not correct?

a. If A gives his ring to B but it is not clear whether A donated it or merely lent it, the contract
should be interpreted as commodatum rather than donation
b. If A sells his car to B but A has 4 cars and it cannot be determined which car was sold, the
contract of sale is void
c. A borrowed ₱100,000 from B which bears interest at 12% per year but there is doubt whether it is
payable in 2 or 3 years, the period of payment shall be interpreted at 2 years
d. A engaged the services of B but the contract did not indicate the amount of compensation to be
paid, the amount thereof shall be the rate that is customarily paid in the place where the services
were rendered

50. A owes to B ₱100,000. A also owes C ₱100,000. A failed to pay both obligations. B filed a complaint
in court and a writ of attachment was issued against A’s land situated in Manila. Later, A sells his land
in Makati to D. Which of the following is not correct?
a. The sale of the land in Makati is presumed fraudulent because a writ of attachment has been
issued
b. C may go to court for the rescission of the sale to D
c. B may go to court for the rescission of the sale to D
d. Neither B nor C can go to court for the rescission of the sale to D because the land in Makati was
not the object of the writ of attachment.

51. A contract is presumed to have been entered into

a. In the place where the offer was made
b. In the place where the acceptance was made
c. In the place where the performance was made
d. In the place where the payment was made

52. Before acceptance is conveyed an offer becomes ineffective upon the death, civil interdiction,
insanity or insolvency
a. Of the offeror
b. Of the offeree
c. Of either party
d. Of both the offeror and offeree

53. Which of the following is not correct?

a. The obligation to give includes that of delivering all its accessions and accessories even though
they may not have been mentioned
b. If a person obliged to do something fails to do it, the same shall be executed at his cost
c. When the obligation consists in not doing, and the obligor does what has been forbidden him, it
shall be undone at his expense
d. In reciprocal obligations, from the moment one of the parties fulfills his obligation, delay by the
other begins
 Page 9
54. When a condition has been imposed with the intention of suspending the efficacy of an obligation to
give, which of the following shall be observed during the pendency of the condition?
a. If the thing is lost, the obligation shall be extinguished
b. When the thing deteriorates, the impairment is to be borne by the creditor
c. If the thing perishes, or goes out of commerce, or disappears in such a way that its existence is
unknown or it cannot be recovered, the debtor shall be obliged to pay damages
d. If the thing is improved by nature, or by time, the improvement shall inure to be benefit of the
creditor

55. Statement A- Merger which takes place in the person of the principal debtor or creditor benefits the
guarantors
Statement B- Confusion which takes place in the person of the guarantors does not extinguish the
obligation
a. Only Statement A is true
b. Only Statement B is true
c. Both statements are true
d. Both statements are false

56. X borrowed money from Y. X constituted a real estate mortgage over his house to secure the loan. It
was stipulated that in case X could not pay the loan in time, the house would belong to Y. Which is
correct?
a. Y shall become owner of the house upon default by X by virtue of their written agreement
b. Y shall become the owner of the house by virtue of the default by X
c. Y shall only enjoy the right of alienation over the land
d. Y shall be entitled to the right of appropriation of the land

57. A was obliged to pay B P1M on December 31, 2024. A paid B on December 31 2023 believing that
the obligation was already due and demandable. How much may A recover from B on March 31,
2025?

a. Nothing
b. Legal interest for one year and three months
c. P1M plus legal interest for one year
d. Legal interest for one year

58. A promised to deliver to B 100 sacks of palay from the farmer’s 2024 summer harvest. A failed to
deliver what was promised due to floods which destroyed the crops before harvest season. Is the
obligation extinguished?
a. No, generic thing does not perish
b. No, A can still raise the same from future crops
c. Yes, the generic thing is limited to the 2024 harvest
d. Yes, the contract is void due to non-existing object at the time of perfection of contract

59. A promissory note reads “I promise to pay B, P100,000 on July 30, 2024. Sgd. A”. B transferred the
note to C. Later, X stole the promissory note and transferred the note to Y who received the note in
good faith. On maturity date, Y presented the note to A and demanded payment. A paid the note in
good faith. In this case,
a. A’s obligation is extinguished
b. C cannot collect from A
c. A’s obligation is not extinguished
d. C can recover only either form X or Y
 Page 10
60. The pre-nuptial agreement of H and W, husband and wife, provides for complete separation of
property. Later, H, with violence and intimidation forced W to sell to him (H), W’s pieces of jewelry.
What is the status of the contract?
a. Rescissible, if W suffered a lesion of more than ¼ of the value of the property
b. Voidable, because the consent of the W is vitiated
c. Unenforceable, if the value is at least P500
d. Void, because husband and wife are not allowed to sell property to each other

61. S sold his piano to B for P200,000, payable in installment. A chattel mortgage was constituted on the
piano. B defaulted in two installment payments. S demanded payments of the unpaid obligation
amounting to P120,000 and a writ of attachment was issued and the piano was sold for P100,000.
Can A still recover the deficiency?
a. Yes, even without stipulation
b. Yes, only if stipulated that incase of foreclosure the buyer will pay any deficiency
c. No, even if stipulated
d. No, unless there is stipulation

62. A contract of sale is

a. Consensual, hence delivery is not necessary to transfer ownership
b. Accessory, because it cannot stand alone as two persons are needed as the parties to the contract
c. Real, because delivery is necessary to transfer ownership
d. Commutative because there is an exchange of values

63. Which of the following statements is true?

a. If goods are sold on “sale or return”, the risk of loss of the thing sold remains with the seller after
its delivery to the buyer
b. In sale on “trial or satisfaction”, the buyer becomes the owner of the thing upon delivery but the
ownership is reverted to the seller if the buyer returns it
c. When a thing is purchased from a merchants’ store, the buyer acquires the title to the thing
although the seller may have stolen it or acquired it from a thief
d. A negotiable document of title becomes non-negotiable if it is stamped with the mark “non-
negotiable.

64. D was driving on his way to Manila from the province when he suffered a busted tire. Not having any
spare tire, he went to a nearby car spare parts store to buy a new tire. However, he did not have
sufficient money with him so he phoned G, his friend, who happened to know S, the store owner. G
then instructed D to give to S the telephone through which G told S “Don’t worry, if D cannot pay,
just charge me”. D was thus able to buy a new tire for P6,000 for which S issued D a sales invoice.
Which is correct?
a. If D cannot pay, S can proceed against G. to make good his promise to pay D’s debt
b. G’s promised cannot be enforced against him because he did not execute any writing for the
guaranty he made
c. S can enforce G’s promised to answer for D’s debt since the guaranty was witnessed by D
d. S can enforce G’s promise because there was a writing of some kind, the invoice for the sale of
the tire.

65. There is no novation of the obligation if

(1) The period for payment is shortened from 5 years to 3
(2) The period for payment is extended from 3 years to 5 years
a. True, true
b. True, false
c. False, true
d. False, false
 Page 11

66. A delivered to B the following instrument:

In payment of 2 grams of shabu, A made a promissory note which reads: “I promise to pay to B
P10,000 Sgd. A.” B indorsed the note in blank before maturity and delivered it to C for value. When
due, A refused to pay and C sued B. Could C recover from B?
a. No, C could not sue B because B did not write the name of C as indorsee
b. No, the instrument is not negotiable and B is a mere assignor of credit
c. Yes, provided C gives notice of dishonor to B otherwise B is discharged from liability
d. Yes, the endorsement will be considered as an assignment, hence B will be liable as an assignor of
the instrument

67. Using the preceding number, but the note is in the payment of merchandise purchased by A from B
and A failed to pay due to insolvency. Could C collect from B?
a. No, C could not sue B because B did not write the name of C as indorsee
b. No, the instrument is not negotiable and B is a mere assignor of credit
c. Yes, provided C gives notice of dishonor to B otherwise B is discharged from liability
d. Yes, the endorsement will be considered as an assignment, hence B will be liable as an assignor
of credit

68. Reformation is not the proper remedy if

a. The mutual mistake of the parties causes the failure of the instrument to disclose their real
agreement
b. One party was mistaken and the other acted fraudulently or inequitably in such a way that the
instrument does not show their true intention
c. There was mistake, fraud, inequitable conduct or accident which prevented the meeting of the
minds of the contracting parties
d. The true intention of the contracting parties is not expressed in the instrument purporting to
embody the agreement by reason of mistake, fraud, inequitable conduct or accident

69. If the debtor gives a property to his creditor who accepts it in payment of an obligation in money, this
will be governed by
a. Cession
b. Barter
c. Exchange
d. Sales

70. The debtor shall not lose the right to make use of the period in one of the following cases
a. When he becomes insolvent
b. When he violates any undertaking in consideration of which the creditor agreed to the period
c. When the debtor attempts to abscond
d. When he does not give any guaranty or security to the creditor

U.I.O.G.D