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1. On January 1, S orally sold to B a specific ring for P450.00. The parties agreed that S shall deliver the
ring to B on January 5, while B pay the price on January 7.
a. The contract is perfected on January 5, when the ring is delivered by S to B
b. The contract is perfected on January 1, when the parties had meeting of minds on the object
and price
c. The contract is perfected on January 7, when the price is paid, since both parties would then
have performed their obligations in the contract
d. There is no perfected contract because the sale was made orally
2. The price in a contract of sale is certain except:
a. When the parties have fixed or agreed upon a definite amount or agreed upon a definite
amount
b. If the price is certain with reference to another thing certain.
c. If the fixing of the price is left to the discretion of one of the contracting parties
d. If the price fixed is that which the thing sold would have on a definite day or in particular
exchange or market

3. S and B entered into a contract whereby S transferred to B a specific car for the price of P200,000,
while B gave to S P90,000 cash and a diamond ring worth P110,000. The heading of the written
contract reads, “Contract of Sale.”
a. Contract is void because the intention of the parties is void since the value of the diamond ring
is more than the monetary consideration given
b. The contract is valid contract of sale as intended by the parties regardless of whatever the
monetary consideration is more or less than the value of the property consideration
c. The contract is a valid contract of barter since the value of the property is more than the
monetary consideration. The intention of the parties is immaterial
d. The contract is partly a contract of barter and partly a contract of sale

4. A, B and C are co-owners of a parcel of land pro-indiviso. A sold his share to B in an absolute deed of
sale. Which is correct
a. The deed of sale between A and B is void since it was made not in favor of a third person
b. C may exercise his right of redemption on the interest of A sold to B
c. C may redeem only ½ of the share sold by A to B
d. C cannot exercise the right of redemption since the sale was made to a co-owner

5. S sold his cat to B for P2,000. No payment has been made and the sales document does not provide for
the date of delivery. Before delivery and payment, the cat gave birth to a kitten
a. B is entitled to the kitten which was born after the perfection of the sale
b. S is entitled to the fruit as B has not yet paid the price
c. S in entitled to the fruit because it was born before his obligation to deliver the cat
d. B should pay an additional amount for the kitten to be entitled to it.

6. Which of the following is common requisite for Pledge, Chattel Mortgage and Antichresis?
a. The amount of the principal and interest must be in writing
b. The property must be in the possession of the creditor
c. To bind third person they must be duly recorded in the office of Register of Deeds
d. It is constituted to secure the fulfillment of a principal obligation

7. Which of the following statement is true and correct

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a. Unless otherwise agreed upon by the parties, the sale of the mortgaged property extinguishes
in full the obligation of the mortgagor to the mortgagee
b. Pledge and mortgage are considered principal contracts
c. When the obligation is secured by a pledge or mortgage and it is not paid when due, the
pledgee or mortgagee may dispose the collateral even if there is no agreement to that effect
between the parties
d. In both pledge and mortgage the creditor is entitled to deficiency judgment

8. The following requisites are essential to the contracts of pledge and mortgage, except:
a. That they be constituted to secure the fulfillment of a principal obligation
b. That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged
c. The pledgor or mortgagor can appropriate the object of pledge or mortgage upon default
d. That the persons constituting the pledge or mortgage have the free disposal of their property,
and in the absence thereof, that they be legally authorized for the purpose

9. A borrowed P50,000 from B with A’s cellphone given to B by way of pledge. It was stipulated that in
case of non-payment on due date, the cellphone would belong to B. This forfeiture is:
a. Right of redemption
b. Conventional redemption
c. Pactum commissorium
d. Legal redemption

10. I. Pledges and mortgages are accessory contracts

II. A principal obligation may still be valid even if the pledge or mortgage is void
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

11. person binds himself to render some service or to do something in representation or on behalf of
another, with the consent or authority of the latter
a. Agency
b. Pledge
c. Mutuum
d. Commodatum

12. The elements of a contract of agency are the following, except:

a. Consent, express or implied, of the parties to establish the relationship
b. The object is the execution of a juridical act in relation to a third person
c. The agent acts as a representative for himself
d. The agent acts within the scope of his authority

13. Y with general powers of attorney given to him by P in writing, sold two parcels of land, one for less
than the price appearing in the inventory prepared by P and the other for the double the price that
appeared in the aforesaid inventory. Which is correct?
a. Both contracts are binding upon P
b. The sale for double the price appearing in the inventory is binding upon P
c. Both contracts cannot be enforced against P
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d. The sale for less than the price appearing in the inventory is binding upon P

14. I. The underlying principle of the contract of agency is to accomplish results by using the services of
others – to do a great variety of things like selling, buying, manufacturing, and transporting
II. Its purpose is to extend the personality of the principal of the part for whom another acts and from
whom he or she derives the authority to act
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

15. I. The basis of agency is representation, that is, the agent acts for and on behalf of the principal on
matters within the scope of his authority and said acts have the same legal effect as if they were
personally executed by the principal
II. For a contract of agency to exist, the consent of both parties is essential, he principal consents that
the other party, the agent, shall act on his behalf, and the agent consents so to act.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

16. A subscribed to 1,000 voting shares of stock of X Corporation. She paid 25% of the said subscription
During the stockholders meeting. Can A vote all he subscribed shares?
a. No, because the subscription has not yet been fully paid
b. No, Because A ‘s shares have become delinquent which cannot be voted
c. Yes as to the paid percentage of subscription
d. Yes, because unpaid shares not delinquent can be voted

17. Which of the following statements pertaining to treasury shares is correct?

a. Treasury shares are not part of issued capital stock
b. Treasury share may not be disposed of at a price lower than the par or issued price even if it is
reasonable and approved by the board of directors
c. Treasury shares are entitled to vote
d. Treasury shares, once disposed, entitle the purchaser or transferee the right to dividends

18. Which of the following statements is false?

a. Treasury shares revert to the unissued shares of the corporation and being in the treasury they
don’t have the status of outstanding shares
b. Shares issued without par value shall be deemed fully paid and non-assessable and the holder
of such shares shall not be liable to the corporation or its creditors in respect thereto
c. Redeemable shares may be redeemed regardless of the existence of unrestricted retained
earnings provided such redemption would not cause insolvency or inability of the corporation
to meet its debts as they mature
d. When par value shares are issued above par, the premium or excess is not to be considered as
part of the legal capital

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19. In case the member of the board of directors of a corporation still constitute a quorum, and there are
vacancies, who will fill up such vacancies?
Removal Resignation Expiration of term Increase in the number of directors
a. Stockholders Board Stockholders Board
b. Board Board Stockholders Stockholders
c. Stockholders Board Stockholders Stockholders
d. Stock Holders Stockholders Board Stockholders

20. Claude, the registered stockholder of 1,000 shares of ABC Corporation pledged the shares to Conrad by
endorsement in blank of the covering stock certificates and execution of a Deed of Assignment of
Shares of Stock, intended as collateral for a loan of Php 1M that was also supported by a separate
promissory note Under these facts, is there a valid pledge of the shares of stock to Conrad?
a. No, because shares of stock are intangible personal properties whose possession cannot be
delivered and, hence cannot be the subject of pledge
b. No, because the pledge of shares of stock requires double registration with the Register of
Deeds of the principal place of business of the corporation and of the residence of the pledger
c. Yes, because endorsement and delivery of the certificates of stock is equivalent to the transfer
of possession of the covered shares to the pledgee
d. Yes, Because the execution of the Deed of Assignment of Shares of Stock is equivalent to a
lawful pledge of shares of stock.

21. Which of the following instruments is not negotiable for the reason that the instrument is not payable
at a determinable future time?
a. 30 days after demand, drawer A directs B to pay C or order P10,000. Sgd. A
b. 20 days after the death of Z, I promise to pay to the order of B, P10,000. Sgd. Q
c. 10 days after A passes the Bar exams, I promise to pay to the order of B P10,000. Sgd. C
d. On or before February 14 2016, I promise to pay P or order P10,000.

22. Which of the following is negotiable?

a. “I promise to pay B or order P20,000 if he will pass the Bar exams on 2013.” (Sgd.) A
b. “I promise to pay B or order P20,000 in four installments.” (Sgd. A)
c. “I promise to pay B or order P20,000, 30 days after the death of his father.” (Sgd.) A
d. “I promise to pay B, P20,000.” (Sgd.) A

23. Which of the following instruments is not negotiable for the reason that the instrument is not payable
at a determinable future time?
a. “On the death of X. I promise to pay to the order of B P1,000.” (Sgd) A
b. “On or before October 30, 2015, I will promise to pay B or his order P10,000.” (Sgd A)
c. “Sixty days after sight, I promise to pay to the order of B P5.000.” (Sgd.) A
d. “Ten days before the death of X, I promise to pay B or his order P10,000.” (Sgd. ) A

24. A makes a note in favor of B with the understanding that it is not to become binding until it is also
signed by C. If B files an action on the note will she be able to recover from the note?
a. No because the instrument being subject to a condition therefore not a negotiable instrument.
b. Yes because only the delivery of the instrument is subject to the condition but not the promise
to pay, hence the instrument is negotiable.
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c. Yes because in the hands of B the presumption is conclusive because it was validly and
intentionally delivered.
d. No because B is an immediate party and the presumption of delivery is rebuttable and A can
show that the delivery was conditional and the condition is not fulfilled.

25. A issued the following promissory note:

“I promise to pay to the order of B P100,000 on February 25, 2016.” (Sgd. A)
At the back of the note are the following indorsements:

“To C: (Sgd. B)
__________ (Sgd. C)”

If the instrument is in the hands of D, how can D validly negotiate the note to E?
a. by writing his name on top of the signature of C and deliver it to E
b. by indorsing it specially to E
c. by signing in blank
d. by delivering the note to E

26. Andrew sold his Laptop for P 20,000 to Bobby. There was no fixed date for the performance of the
obligation of both parties. The obligation of the demand seller is:
a. To wait for demand before delivering the laptop
b. To deliver the laptop immediately as this is a perfected contract
c. To deliver the laptop after receiving the payment
d. To rescind the contract

27. Apple promised to sell her house and lot Cube to Bubbles if the latter decides to live in Cebu. This
obligation is:
a. To wait for demand before delivering the laptop
b. To deliver the laptop immediately as this is a perfected contract
c. With resolutory potestative condition on the part o the debtor and is therefore valid
d. With suspensive potestative condition on the part of the creditor and is therefore valid

28. When those the buyer of a thing has the right to the fruits of the thing bought?
a. From the time the fruits are delivered
b. From the time the obligation you delivered the thing bought arises
c. From the time the sale id perfected
d. From the time the thing bought is delivered

29. A condition with, if imposed on an obligation will be disregarded and wi8ll therefore make the
obligation immediately demandable.
a. If Juan commits suicide
b. If Juan kills Pedro
c. If Juan passes the bar examination
d. If juan will not rise from the dead

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30. A borrower who uses the thing for a purpose different from that intended, delays its return, receives
the thing under appraisal, lends it to a third person, or saves his property instead the of thr thing
borrowed shall be liable even in case of fortuitous event, because
a. The nature of the obligation requires the assumption of risk
b. The parties have expressly stipulated such liability
c. The law expressly so provides
d. Time is of the essence

31. A and B entered into a contract of lease with option to buy the car of the former for a term of two
years. For three months B failed to pay the rentals and by reason thereof, A repossessed the car.
Hence,
a. A can collect the unpaid rentals for three months
b. A can collect the unpaid rentals for the duration of the term of the lease of two years
c. When A deprived B the possession of the leased car, he has no further action against the latter
for any unpaid rentals
d. A shall return the rentals without deductions to B by virtue of the rescission of the contract of
lease with option to buy

32. A offered in writing to sell his house and lot for PHP 1M to B on January 20, 2001. B requested to give
him 1 month to raise the amount. On January 25, 2001, A informed B that he has raised the price to
PHP 1.5M. Can B compel to accept the payment to PHP 1M for the sale of the house and lot?
a. Yes, because A is already estopped by his written offer of PHP 1M
b. Yes, because the one month option period has not yet expired
c. No, because there is as yet no perfected sale
d. No, because the seller has the sole discretion in fixing the price with or without the concurrence
of the buyer

33. S sells to B at P50 per liter 300 liters of gasoline stored in his truck tank, which is unknown to the
parties contains 500 liters. What is the status of the contract of sale between S and B?
a. The sale is void because the quantity available is more than the quantity sold
b. The sale is valid up to 500 liters of gasoline. B must pay for the additional 200 liters
c. The sale is valid up to 3oo liters of gasoline. B becomes the owner of the 3/5 of the whole stock,
while S becomes the owner of the 2/5 thereof
d. The sale is rescissible because S will suffer lesion of more than ¼ of the value of the whole stock

34. Which of the following is not a requisite of the object of a contract of sale?
a. It must be within the commerce of men
b. It must be licit
c. It must be determinate thing
d. Vendor must have the right to transfer the ownership of the thing t the time of sale

35. The following are characteristics of a contract of sale except one which refers to the payment by
cession
a. There is no pre-existing credit
b. The cause or consideration is the price
c. There is more freedom in fixing the price
d. Assignee of the property acquires the right to sell the thing but not the ownership thereof
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36. A borrowed P100,000 from B, and as security, he pledged his ring, cellphone and laptop. On due date,
A paid P70,000. As a result
a. A can demand the return of one of the things pledged
b. A can demand the return of any two of the things pledged
c. A can demand the return of the ring
d. A cannot demand the return of any of the things pledged

37. Is an accessory, real and unilateral contract by virtue of which the debtor or a third person delivers to
the creditor or to a third person movable property as security for the performance of the principal
obligation
a. Chattel mortgage
b. Pledge
c. Real mortgage
d. Antichresis

38. Is a contract embodied in a public instrument recorded in the Registry of Property, by which the owner
of an immovable directly and immediately subjects it, whoever the possessor may be, to the fulfillment
of the obligation for whose security it was constituted
a. Chattel mortgage
b. Pledge
c. Real mortgage
d. Antichresis

39. It is a contract in which the debtor guarantees to the creditor the fulfillment of a principal obligation,
subjecting for the faithful compliance therewith a real property in case of non-fulfillment of said
obligation at the time stipulated
a. Chattel mortgage
b. Pledge
c. Real mortgage
d. Antichresis

40. X constituted a chattel mortgage on a car ( valued at Php 1M) to secure a Php 500,000 loan. For the
mortgage to be valid, X should have
a. The right to mortgage the car to the extent of half its value
b. Ownership of the car
c. Unqualified free disposal of his car
d. Registered the car in his name

41. One whom the agent represents and from whom he derives authority
a. Principal
b. Agent
c. Attorney in fact
d. None of the above

42. One who acts for and represents the principal

a. Principal
b. Agent

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c. Mandate
d. None of the above

43. I. Agency is basically personal, representative and derivative in nature

II. The authority of the agent to act emanates from the powers granted to him by his principal; his act
is the act of the principal if done within the scope of the authority
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

44. I. A person dealing with an agent assumes the risk of lack of authority in the agent
II. The principal, on the other hand, may act on the presumption that third persons dealing with his
agent will not be negligent in failing to ascertain the extent of his authority as well the existence of his
agency
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

45. The following are distinction between a sale and an agency:

I. In an agency, the principal retains ownership and control over the property and the agent merely
acts on the principal’s behalf and under his instructions in furtherance of the objectives for
which the agency was established
II. The contract is clearly a sale if the parties intended that the delivery of the property will effect a
relinquishment of title, control, and ownership in such a way that the recipient may do with the
property as he pleases
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

46. X Corporation whose business purpose is to manufacture and sell vehicles, invested its funds in Y
Corporation, an investment firm through a resolution of its Board of Directors. The investment grew
tremendously on account of Y Corporation’s excellent business judgment. But a minority stockholder in
X Corporation assails the investment as ultra vires. Is he right and, if so, what is the status of the
investment?
a. Yes. It is an ultra vires act if the corporation itself voidable only, subject to stockholders
ratification
b. Yes, it is an ultra vires act of its Board of Directors and thus void
c. Yes, it is an ultra vires act of its Board of Directors but voidable only, subject to stockholders
ratification
d. Yes , it is an ultra vires act of the corporation itself, and consequently void

47. In election for the Board of Trustees of non – stock corporations, members may cast as many votes as
there are trustees to be elected but may cast more than one vote for one candidate. This is true
a. Unless set aside by the members in plenary session
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b. In every case even if the Board of Trustees resolves otherwise

c. Unless otherwise provided in the Articles of Incorporation or in the By- Laws
d. In every case even if the majority of the members decide otherwise during the election

48. The rule is that the valuation of the shares of a stockholder who exercises his appraisal rights is
determined as of the day prior to the date on which the vote was taken. This is true
a. Regardless of any depreciation or appreciation in the share’s fair value
b. Regardless of any appreciation in the share’s fair value
c. Regardless of any depreciation in the share’s fair value
d. Only if there is no appreciation or depreciation in the share’s fair value

49. The term of the one year Board of Directors of AAA Corporation expired last February 15, 2012. No
new election of the Board of Directors was called, hence the existing members of Board continue as
Directors in Hold over capacity. Which statement is most accurate?
a. The is allowed provided there is a valid and justifiable reason for not calling for an election of
the new member of the Board
b. This is not allowed because the term of the directors must only be for one year
c. The position of the member of the Board of Directors will be automatically declared vacant
d. Acting as members of the Board of Directors in a hold over capacity must be ratified by the
stockholders

50. X maintains a savings deposit in the amount of Php 1M with ABC Bank Corporation. X also has obtained
a loan from ABC Bank Corporation in the amount of Php 1M. In case of default
a. ABC Bank can set – off the loan from the savings account being maintained by X with ABC Bank
b. Set – off is not possible because legal compensation is not allowed in banking transaction
c. Deposit accounts are usually earmarked for specific purpose hence off – setting is not legally
possible
d. Off – setting is not possible because the obligation of X is a “simple loan”

51. A holder in due course holds the instrument free from any defect of title of prior parties and free from
defenses available to prior parties among themselves. An example of such a defense is
a. Fraud in inducement
b. Duress amounting to forgery
c. Fraud in esse contractus
d. Alteration

52. Approval from the SEC, AAA Corporation decided to immediately start the operation of its business
despite the fact that it has no approved by – laws what is the legal status of the AAA Corporation?
a. A de jure corporation
b. A de facto corporation
c. A corporation estoppel
d. An unregistered corporation

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53. X, the President of ZZZ Corporation was authorized was authorized by the Board of Directors of ZZZ.
Corporation to obtain loan from YYY Bank and to sign documents in behalf of the corporation. X
personally negotiated for the loan and got the loan at very low interest rates. Upon maturity of the
loan, ZZZ Corporation was unable to pay. Which statement is most accurate?
a. Because X personally acting in behalf of the Corporation. He can be held personally liable
b. X, as President, cannot be personally held liable for the obligation of the corporation even
though he signed all of the loan documents, because the loan was authorized by the Board
c. YYY Bank can choose as to who it wants to hold liable for the low
d. If ZZZ Corporation cannot pay, X can be held subsidiarity liable

54. X owns 99% of the capital stocks of SSS Corporation X also own 99% of TTT Corporation. SSS
Corporation obtained a loan from VVV Bank on due date, SSS Corporation defaulted. TTT Corporation
is financially health. Which statement is accurate?
a. X, being controlling owner of SSS Corporation can automatically be held personally liable for the
loan of SSS Corporation
b. TTT Corporation, owned 99% by X, can automatically he held liable
c. SSS Corporation and TTT Corporation, although both are owned by X, are two distinct
corporation with separate juridical personalities Hence, the TTT Corporation cannot
automatically be held liable for the loan of SSS Corporation
d. The principle of piercing the veil of corporation fiction can be applied in this case

55. XXX Corporation and YYY Corporation have agreed to be merged into one corporate. To facilitate the
merger, both corporations agreed that the merger be made effective on May 31, 2012. The SEC
approved the Article of Merger on June 30, 2012. Which statement is most accurate
a. The effective date of the merger is May 31, 2012 the date stipulated by the parties as the
effective date
b. The effective date of the merger is always the date of the approval of the Articles of Merger By
the SEC
c. The effective date of the merger would be the date approved by the Board of Directors and the
stockholders
d. The stockholders and the Board of Directors can set the effective date of the merger any time
after the approval of the SEC

56. 1st Statement- In delagacion, the insolvency of the new debtor can never revive the orginal debtor’s
obligation
a. True, true
b. True, false
c. False, false
d. False, true

57. In Facultative, if substitution has been made, which of the following is false?\
a. The obligation is extinguished
b. The loss of the original prestation is immaterial
c. The obligation is converted into a simple obligation

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d. The obligation ceases to be facultative

58. It presuppose not only that the obligor is able, ready and wiling but more so, in the act ;of performing
his obligation.
a. Payment or performance
b. Tender of payment
c. Consignation
d. Application of payment

59. Facultative as distinguished from Alternative obligation

a. If it us impossible to give all except one, that last one must still be given
b. The right to choose may be given either to debtor or creditor
c. Various things are due , but the giving of one is sufficient
d. If giving principal obligation is void, there is no necessity of giving the substitute

60. Which of the following is not considered as quasi-contract?

a. Solutio indebiti
b. When in fact the manager has been tacitly authorized by the owner
c. Negotiorum gestio
d. Reimbursement due the person who saved from destruction the property during fire or strom
without the knowledge of the owner

61. One of the following characteristics of dacion en pago is a characteristic of a contract of sale. Which is
it?
a. There is pre-existing credit
b. Obligations are extinguished
c. There is less freedom in fixing the price
d. Ownership of the object is transferred to the other party

62. The following are the characteristics of a contract of sale, except:

a. Principal, which means that a contract of sale can exist by itself
b. Real, which requires the delivery of the object of the contract of sale for its perfection
c. Onerous, where rights are acquired in exchange of valuable consideration
d. Bilateral, which means that both parties are bound reciprocally to each other

63. The following are the essential elements of a contract of sale, except:
a. Consent of the contracting parties
b. Subject matter which should be determinate
c. Price which is certain in money or its equivalent
d. Warrant against eviction and against hidden defects

64. S sold shares of stock to X Corp to B at P2 per share. The transfer of the ownership of the shares of
stock may be made through any of the following means, except:
a. Execution of the sale in a public instrument
b. The giving by S to B of the power to vote in the stockholder’s meting of X Corp and the actual
exercise thereof by B.
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c. The endorsement by S of the stock certificate covering the 500 shares of stock and its placing it
in the possession of B
d. The issuance by S of the official receipt for the full payment of the purchase of the shares by B

65. Which of the following may not be the object of a contract of sale?
a. Things, having potential existence
b. Things, the acquisition of which depends upon contingency which may or may not happen
c. Vain hope or expectancy
d. Things subject to a resolutory condition

66. I. Agency may be express, or implied from the acts of the principal, from his silence or lack of action,
or his failure to repudiate the agency, knowing that another person is acting on his behalf without
authority.
II. Agency may be oral, regardless of any law requiring a specific form
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

67. Agency may be implied from any of the following, except:

a. Acts of the principal
b. Principal’s silence
c. Stipulation
d. Principal’s failure to repudiate the agency

68. One who clothes another with apparent authority as his agent, and holds him out to the public as such,
cannot be permitted to deny the authority of such person to act as his agent, to the prejudice of
innocent third parties dealing with such person in good faith, and in the honest belief that he is what
he appears to be
a. General agency
b. Express agency
c. Implied agency
d. Agency by estoppel

69. I. 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
II. Between persons who are absent, the acceptance of the agency cannot be implied from the silence
of the agent
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

70. Between persons who are absent, the acceptance of the agency cannot be implied from the silence of
the agent, except:
I. When the principal transmits his power of the attorney to the agent, who receives it without any
objection

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II. When the principal entrusts to him by letter or telegram a power of attorney with respect to the
business in which he has habitually engaged as an agent, ad he did not reply to the letter or
telegram
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

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1. On January 1, S orally sold to B a specific ring for P450.00. The parties agreed that S shall deliver the
ring to B on January 5, while B pay the price on January 7.
a. The contract is perfected on January 5, when the ring is delivered by S to B
b. The contract is perfected on January 1, when the parties had meeting of minds on the object
and price
c. The contract is perfected on January 7, when the price is paid, since both parties would then
have performed their obligations in the contract
d. There is no perfected contract because the sale was made orally
2. The price in a contract of sale is certain except:
a. When the parties have fixed or agreed upon a definite amount or agreed upon a definite
amount
b. If the price is certain with reference to another thing certain.
c. If the fixing of the price is left to the discretion of one of the contracting parties
d. If the price fixed is that which the thing sold would have on a definite day or in particular
exchange or market

3. S and B entered into a contract whereby S transferred to B a specific car for the price of P200,000,
while B gave to S P90,000 cash and a diamond ring worth P110,000. The heading of the written
contract reads, “Contract of Sale.”
a. Contract is void because the intention of the parties is void since the value of the diamond ring
is more than the monetary consideration given
b. The contract is valid contract of sale as intended by the parties regardless of whatever the
monetary consideration is more or less than the value of the property consideration
c. The contract is a valid contract of barter since the value of the property is more than the
monetary consideration. The intention of the parties is immaterial
d. The contract is partly a contract of barter and partly a contract of sale

4. A, B and C are co-owners of a parcel of land pro-indiviso. A sold his share to B in an absolute deed of
sale. Which is correct
a. The deed of sale between A and B is void since it was made not in favor of a third person
b. C may exercise his right of redemption on the interest of A sold to B
c. C may redeem only ½ of the share sold by A to B
d. C cannot exercise the right of redemption since the sale was made to a co-owner

5. S sold his cat to B for P2,000. No payment has been made and the sales document does not provide for
the date of delivery. Before delivery and payment, the cat gave birth to a kitten
a. B is entitled to the kitten which was born after the perfection of the sale
b. S is entitled to the fruit as B has not yet paid the price
c. S in entitled to the fruit because it was born before his obligation to deliver the cat
d. B should pay an additional amount for the kitten to be entitled to it.

6. Which of the following is common requisite for Pledge, Chattel Mortgage and Antichresis?
a. The amount of the principal and interest must be in writing
b. The property must be in the possession of the creditor
c. To bind third person they must be duly recorded in the office of Register of Deeds
d. It is constituted to secure the fulfillment of a principal obligation

7. Which of the following statement is true and correct

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a. Unless otherwise agreed upon by the parties, the sale of the mortgaged property extinguishes
in full the obligation of the mortgagor to the mortgagee
b. Pledge and mortgage are considered principal contracts
c. When the obligation is secured by a pledge or mortgage and it is not paid when due, the
pledgee or mortgagee may dispose the collateral even if there is no agreement to that effect
between the parties
d. In both pledge and mortgage the creditor is entitled to deficiency judgment

8. The following requisites are essential to the contracts of pledge and mortgage, except:
a. That they be constituted to secure the fulfillment of a principal obligation
b. That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged
c. The pledgor or mortgagor can appropriate the object of pledge or mortgage upon default
d. That the persons constituting the pledge or mortgage have the free disposal of their property,
and in the absence thereof, that they be legally authorized for the purpose

9. A borrowed P50,000 from B with A’s cellphone given to B by way of pledge. It was stipulated that in
case of non-payment on due date, the cellphone would belong to B. This forfeiture is:
a. Right of redemption
b. Conventional redemption
c. Pactum commissorium
d. Legal redemption

10. I. Pledges and mortgages are accessory contracts

II. A principal obligation may still be valid even if the pledge or mortgage is void
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

11. person binds himself to render some service or to do something in representation or on behalf of
another, with the consent or authority of the latter
a. Agency
b. Pledge
c. Mutuum
d. Commodatum

12. The elements of a contract of agency are the following, except:

a. Consent, express or implied, of the parties to establish the relationship
b. The object is the execution of a juridical act in relation to a third person
c. The agent acts as a representative for himself
d. The agent acts within the scope of his authority

13. Y with general powers of attorney given to him by P in writing, sold two parcels of land, one for less
than the price appearing in the inventory prepared by P and the other for the double the price that
appeared in the aforesaid inventory. Which is correct?
a. Both contracts are binding upon P
b. The sale for double the price appearing in the inventory is binding upon P
c. Both contracts cannot be enforced against P
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d. The sale for less than the price appearing in the inventory is binding upon P

14. I. The underlying principle of the contract of agency is to accomplish results by using the services of
others – to do a great variety of things like selling, buying, manufacturing, and transporting
II. Its purpose is to extend the personality of the principal of the part for whom another acts and from
whom he or she derives the authority to act
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

15. I. The basis of agency is representation, that is, the agent acts for and on behalf of the principal on
matters within the scope of his authority and said acts have the same legal effect as if they were
personally executed by the principal
II. For a contract of agency to exist, the consent of both parties is essential, he principal consents that
the other party, the agent, shall act on his behalf, and the agent consents so to act.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

16. A subscribed to 1,000 voting shares of stock of X Corporation. She paid 25% of the said subscription
During the stockholders meeting. Can A vote all he subscribed shares?
a. No, because the subscription has not yet been fully paid
b. No, Because A ‘s shares have become delinquent which cannot be voted
c. Yes as to the paid percentage of subscription
d. Yes, because unpaid shares not delinquent can be voted

17. Which of the following statements pertaining to treasury shares is correct?

a. Treasury shares are not part of issued capital stock
b. Treasury share may not be disposed of at a price lower than the par or issued price even if it is
reasonable and approved by the board of directors
c. Treasury shares are entitled to vote
d. Treasury shares, once disposed, entitle the purchaser or transferee the right to dividends

18. Which of the following statements is false?

a. Treasury shares revert to the unissued shares of the corporation and being in the treasury they
don’t have the status of outstanding shares
b. Shares issued without par value shall be deemed fully paid and non-assessable and the holder
of such shares shall not be liable to the corporation or its creditors in respect thereto
c. Redeemable shares may be redeemed regardless of the existence of unrestricted retained
earnings provided such redemption would not cause insolvency or inability of the corporation
to meet its debts as they mature
d. When par value shares are issued above par, the premium or excess is not to be considered as
part of the legal capital

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19. In case the member of the board of directors of a corporation still constitute a quorum, and there are
vacancies, who will fill up such vacancies?
Removal Resignation Expiration of term Increase in the number of directors
a. Stockholders Board Stockholders Board
b. Board Board Stockholders Stockholders
c. Stockholders Board Stockholders Stockholders
d. Stock Holders Stockholders Board Stockholders

20. Claude, the registered stockholder of 1,000 shares of ABC Corporation pledged the shares to Conrad by
endorsement in blank of the covering stock certificates and execution of a Deed of Assignment of
Shares of Stock, intended as collateral for a loan of Php 1M that was also supported by a separate
promissory note Under these facts, is there a valid pledge of the shares of stock to Conrad?
a. No, because shares of stock are intangible personal properties whose possession cannot be
delivered and, hence cannot be the subject of pledge
b. No, because the pledge of shares of stock requires double registration with the Register of
Deeds of the principal place of business of the corporation and of the residence of the pledger
c. Yes, because endorsement and delivery of the certificates of stock is equivalent to the transfer
of possession of the covered shares to the pledgee
d. Yes, Because the execution of the Deed of Assignment of Shares of Stock is equivalent to a
lawful pledge of shares of stock.

21. Which of the following instruments is not negotiable for the reason that the instrument is not payable
at a determinable future time?
a. 30 days after demand, drawer A directs B to pay C or order P10,000. Sgd. A
b. 20 days after the death of Z, I promise to pay to the order of B, P10,000. Sgd. Q
c. 10 days after A passes the Bar exams, I promise to pay to the order of B P10,000. Sgd. C
d. On or before February 14 2016, I promise to pay P or order P10,000.

22. Which of the following is negotiable?

a. “I promise to pay B or order P20,000 if he will pass the Bar exams on 2013.” (Sgd.) A
b. “I promise to pay B or order P20,000 in four installments.” (Sgd. A)
c. “I promise to pay B or order P20,000, 30 days after the death of his father.” (Sgd.) A
d. “I promise to pay B, P20,000.” (Sgd.) A

23. Which of the following instruments is not negotiable for the reason that the instrument is not payable
at a determinable future time?
a. “On the death of X. I promise to pay to the order of B P1,000.” (Sgd) A
b. “On or before October 30, 2015, I will promise to pay B or his order P10,000.” (Sgd A)
c. “Sixty days after sight, I promise to pay to the order of B P5.000.” (Sgd.) A
d. “Ten days before the death of X, I promise to pay B or his order P10,000.” (Sgd. ) A

24. A makes a note in favor of B with the understanding that it is not to become binding until it is also
signed by C. If B files an action on the note will she be able to recover from the note?
a. No because the instrument being subject to a condition therefore not a negotiable instrument.
b. Yes because only the delivery of the instrument is subject to the condition but not the promise
to pay, hence the instrument is negotiable.
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c. Yes because in the hands of B the presumption is conclusive because it was validly and
intentionally delivered.
d. No because B is an immediate party and the presumption of delivery is rebuttable and A can
show that the delivery was conditional and the condition is not fulfilled.

25. A issued the following promissory note:

“I promise to pay to the order of B P100,000 on February 25, 2016.” (Sgd. A)
At the back of the note are the following indorsements:

“To C: (Sgd. B)
__________ (Sgd. C)”

If the instrument is in the hands of D, how can D validly negotiate the note to E?
a. by writing his name on top of the signature of C and deliver it to E
b. by indorsing it specially to E
c. by signing in blank
d. by delivering the note to E

26. Andrew sold his Laptop for P 20,000 to Bobby. There was no fixed date for the performance of the
obligation of both parties. The obligation of the demand seller is:
a. To wait for demand before delivering the laptop
b. To deliver the laptop immediately as this is a perfected contract
c. To deliver the laptop after receiving the payment
d. To rescind the contract

27. Apple promised to sell her house and lot Cube to Bubbles if the latter decides to live in Cebu. This
obligation is:
a. To wait for demand before delivering the laptop
b. To deliver the laptop immediately as this is a perfected contract
c. With resolutory potestative condition on the part o the debtor and is therefore valid
d. With suspensive potestative condition on the part of the creditor and is therefore valid

28. When those the buyer of a thing has the right to the fruits of the thing bought?
a. From the time the fruits are delivered
b. From the time the obligation you delivered the thing bought arises
c. From the time the sale id perfected
d. From the time the thing bought is delivered

29. A condition with, if imposed on an obligation will be disregarded and wi8ll therefore make the
obligation immediately demandable.
a. If Juan commits suicide
b. If Juan kills Pedro
c. If Juan passes the bar examination
d. If juan will not rise from the dead

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30. A borrower who uses the thing for a purpose different from that intended, delays its return, receives
the thing under appraisal, lends it to a third person, or saves his property instead the of thr thing
borrowed shall be liable even in case of fortuitous event, because
a. The nature of the obligation requires the assumption of risk
b. The parties have expressly stipulated such liability
c. The law expressly so provides
d. Time is of the essence

31. A and B entered into a contract of lease with option to buy the car of the former for a term of two
years. For three months B failed to pay the rentals and by reason thereof, A repossessed the car.
Hence,
a. A can collect the unpaid rentals for three months
b. A can collect the unpaid rentals for the duration of the term of the lease of two years
c. When A deprived B the possession of the leased car, he has no further action against the latter
for any unpaid rentals
d. A shall return the rentals without deductions to B by virtue of the rescission of the contract of
lease with option to buy

32. A offered in writing to sell his house and lot for PHP 1M to B on January 20, 2001. B requested to give
him 1 month to raise the amount. On January 25, 2001, A informed B that he has raised the price to
PHP 1.5M. Can B compel to accept the payment to PHP 1M for the sale of the house and lot?
a. Yes, because A is already estopped by his written offer of PHP 1M
b. Yes, because the one month option period has not yet expired
c. No, because there is as yet no perfected sale
d. No, because the seller has the sole discretion in fixing the price with or without the concurrence
of the buyer

33. S sells to B at P50 per liter 300 liters of gasoline stored in his truck tank, which is unknown to the
parties contains 500 liters. What is the status of the contract of sale between S and B?
a. The sale is void because the quantity available is more than the quantity sold
b. The sale is valid up to 500 liters of gasoline. B must pay for the additional 200 liters
c. The sale is valid up to 3oo liters of gasoline. B becomes the owner of the 3/5 of the whole stock,
while S becomes the owner of the 2/5 thereof
d. The sale is rescissible because S will suffer lesion of more than ¼ of the value of the whole stock

34. Which of the following is not a requisite of the object of a contract of sale?
a. It must be within the commerce of men
b. It must be licit
c. It must be determinate thing
d. Vendor must have the right to transfer the ownership of the thing t the time of sale

35. The following are characteristics of a contract of sale except one which refers to the payment by
cession
a. There is no pre-existing credit
b. The cause or consideration is the price
c. There is more freedom in fixing the price
d. Assignee of the property acquires the right to sell the thing but not the ownership thereof
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36. A borrowed P100,000 from B, and as security, he pledged his ring, cellphone and laptop. On due date,
A paid P70,000. As a result
a. A can demand the return of one of the things pledged
b. A can demand the return of any two of the things pledged
c. A can demand the return of the ring
d. A cannot demand the return of any of the things pledged

37. Is an accessory, real and unilateral contract by virtue of which the debtor or a third person delivers to
the creditor or to a third person movable property as security for the performance of the principal
obligation
a. Chattel mortgage
b. Pledge
c. Real mortgage
d. Antichresis

38. Is a contract embodied in a public instrument recorded in the Registry of Property, by which the owner
of an immovable directly and immediately subjects it, whoever the possessor may be, to the fulfillment
of the obligation for whose security it was constituted
a. Chattel mortgage
b. Pledge
c. Real mortgage
d. Antichresis

39. It is a contract in which the debtor guarantees to the creditor the fulfillment of a principal obligation,
subjecting for the faithful compliance therewith a real property in case of non-fulfillment of said
obligation at the time stipulated
a. Chattel mortgage
b. Pledge
c. Real mortgage
d. Antichresis

40. X constituted a chattel mortgage on a car ( valued at Php 1M) to secure a Php 500,000 loan. For the
mortgage to be valid, X should have
a. The right to mortgage the car to the extent of half its value
b. Ownership of the car
c. Unqualified free disposal of his car
d. Registered the car in his name

41. One whom the agent represents and from whom he derives authority
a. Principal
b. Agent
c. Attorney in fact
d. None of the above

42. One who acts for and represents the principal

a. Principal
b. Agent

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c. Mandate
d. None of the above

43. I. Agency is basically personal, representative and derivative in nature

II. The authority of the agent to act emanates from the powers granted to him by his principal; his act
is the act of the principal if done within the scope of the authority
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

44. I. A person dealing with an agent assumes the risk of lack of authority in the agent
II. The principal, on the other hand, may act on the presumption that third persons dealing with his
agent will not be negligent in failing to ascertain the extent of his authority as well the existence of his
agency
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

45. The following are distinction between a sale and an agency:

I. In an agency, the principal retains ownership and control over the property and the agent merely
acts on the principal’s behalf and under his instructions in furtherance of the objectives for
which the agency was established
II. The contract is clearly a sale if the parties intended that the delivery of the property will effect a
relinquishment of title, control, and ownership in such a way that the recipient may do with the
property as he pleases
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

46. X Corporation whose business purpose is to manufacture and sell vehicles, invested its funds in Y
Corporation, an investment firm through a resolution of its Board of Directors. The investment grew
tremendously on account of Y Corporation’s excellent business judgment. But a minority stockholder in
X Corporation assails the investment as ultra vires. Is he right and, if so, what is the status of the
investment?
a. Yes. It is an ultra vires act if the corporation itself voidable only, subject to stockholders
ratification
b. Yes, it is an ultra vires act of its Board of Directors and thus void
c. Yes, it is an ultra vires act of its Board of Directors but voidable only, subject to stockholders
ratification
d. Yes , it is an ultra vires act of the corporation itself, and consequently void

47. In election for the Board of Trustees of non – stock corporations, members may cast as many votes as
there are trustees to be elected but may cast more than one vote for one candidate. This is true
a. Unless set aside by the members in plenary session
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b. In every case even if the Board of Trustees resolves otherwise

c. Unless otherwise provided in the Articles of Incorporation or in the By- Laws
d. In every case even if the majority of the members decide otherwise during the election

48. The rule is that the valuation of the shares of a stockholder who exercises his appraisal rights is
determined as of the day prior to the date on which the vote was taken. This is true
a. Regardless of any depreciation or appreciation in the share’s fair value
b. Regardless of any appreciation in the share’s fair value
c. Regardless of any depreciation in the share’s fair value
d. Only if there is no appreciation or depreciation in the share’s fair value

49. The term of the one year Board of Directors of AAA Corporation expired last February 15, 2012. No
new election of the Board of Directors was called, hence the existing members of Board continue as
Directors in Hold over capacity. Which statement is most accurate?
a. The is allowed provided there is a valid and justifiable reason for not calling for an election of
the new member of the Board
b. This is not allowed because the term of the directors must only be for one year
c. The position of the member of the Board of Directors will be automatically declared vacant
d. Acting as members of the Board of Directors in a hold over capacity must be ratified by the
stockholders

50. X maintains a savings deposit in the amount of Php 1M with ABC Bank Corporation. X also has obtained
a loan from ABC Bank Corporation in the amount of Php 1M. In case of default
a. ABC Bank can set – off the loan from the savings account being maintained by X with ABC Bank
b. Set – off is not possible because legal compensation is not allowed in banking transaction
c. Deposit accounts are usually earmarked for specific purpose hence off – setting is not legally
possible
d. Off – setting is not possible because the obligation of X is a “simple loan”

51. A holder in due course holds the instrument free from any defect of title of prior parties and free from
defenses available to prior parties among themselves. An example of such a defense is
a. Fraud in inducement
b. Duress amounting to forgery
c. Fraud in esse contractus
d. Alteration

52. Approval from the SEC, AAA Corporation decided to immediately start the operation of its business
despite the fact that it has no approved by – laws what is the legal status of the AAA Corporation?
a. A de jure corporation
b. A de facto corporation
c. A corporation estoppel
d. An unregistered corporation

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53. X, the President of ZZZ Corporation was authorized was authorized by the Board of Directors of ZZZ.
Corporation to obtain loan from YYY Bank and to sign documents in behalf of the corporation. X
personally negotiated for the loan and got the loan at very low interest rates. Upon maturity of the
loan, ZZZ Corporation was unable to pay. Which statement is most accurate?
a. Because X personally acting in behalf of the Corporation. He can be held personally liable
b. X, as President, cannot be personally held liable for the obligation of the corporation even
though he signed all of the loan documents, because the loan was authorized by the Board
c. YYY Bank can choose as to who it wants to hold liable for the low
d. If ZZZ Corporation cannot pay, X can be held subsidiarity liable

54. X owns 99% of the capital stocks of SSS Corporation X also own 99% of TTT Corporation. SSS
Corporation obtained a loan from VVV Bank on due date, SSS Corporation defaulted. TTT Corporation
is financially health. Which statement is accurate?
a. X, being controlling owner of SSS Corporation can automatically be held personally liable for the
loan of SSS Corporation
b. TTT Corporation, owned 99% by X, can automatically he held liable
c. SSS Corporation and TTT Corporation, although both are owned by X, are two distinct
corporation with separate juridical personalities Hence, the TTT Corporation cannot
automatically be held liable for the loan of SSS Corporation
d. The principle of piercing the veil of corporation fiction can be applied in this case

55. XXX Corporation and YYY Corporation have agreed to be merged into one corporate. To facilitate the
merger, both corporations agreed that the merger be made effective on May 31, 2012. The SEC
approved the Article of Merger on June 30, 2012. Which statement is most accurate
a. The effective date of the merger is May 31, 2012 the date stipulated by the parties as the
effective date
b. The effective date of the merger is always the date of the approval of the Articles of Merger By
the SEC
c. The effective date of the merger would be the date approved by the Board of Directors and the
stockholders
d. The stockholders and the Board of Directors can set the effective date of the merger any time
after the approval of the SEC

56. 1st Statement- In delagacion, the insolvency of the new debtor can never revive the orginal debtor’s
obligation
a. True, true
b. True, false
c. False, false
d. False, true

57. In Facultative, if substitution has been made, which of the following is false?\
a. The obligation is extinguished
b. The loss of the original prestation is immaterial
c. The obligation is converted into a simple obligation

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d. The obligation ceases to be facultative

58. It presuppose not only that the obligor is able, ready and wiling but more so, in the act ;of performing
his obligation.
a. Payment or performance
b. Tender of payment
c. Consignation
d. Application of payment

59. Facultative as distinguished from Alternative obligation

a. If it us impossible to give all except one, that last one must still be given
b. The right to choose may be given either to debtor or creditor
c. Various things are due , but the giving of one is sufficient
d. If giving principal obligation is void, there is no necessity of giving the substitute

60. Which of the following is not considered as quasi-contract?

a. Solutio indebiti
b. When in fact the manager has been tacitly authorized by the owner
c. Negotiorum gestio
d. Reimbursement due the person who saved from destruction the property during fire or strom
without the knowledge of the owner

61. One of the following characteristics of dacion en pago is a characteristic of a contract of sale. Which is
it?
a. There is pre-existing credit
b. Obligations are extinguished
c. There is less freedom in fixing the price
d. Ownership of the object is transferred to the other party

62. The following are the characteristics of a contract of sale, except:

a. Principal, which means that a contract of sale can exist by itself
b. Real, which requires the delivery of the object of the contract of sale for its perfection
c. Onerous, where rights are acquired in exchange of valuable consideration
d. Bilateral, which means that both parties are bound reciprocally to each other

63. The following are the essential elements of a contract of sale, except:
a. Consent of the contracting parties
b. Subject matter which should be determinate
c. Price which is certain in money or its equivalent
d. Warrant against eviction and against hidden defects

64. S sold shares of stock to X Corp to B at P2 per share. The transfer of the ownership of the shares of
stock may be made through any of the following means, except:
a. Execution of the sale in a public instrument
b. The giving by S to B of the power to vote in the stockholder’s meting of X Corp and the actual
exercise thereof by B.
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c. The endorsement by S of the stock certificate covering the 500 shares of stock and its placing it
in the possession of B
d. The issuance by S of the official receipt for the full payment of the purchase of the shares by B

65. Which of the following may not be the object of a contract of sale?
a. Things, having potential existence
b. Things, the acquisition of which depends upon contingency which may or may not happen
c. Vain hope or expectancy
d. Things subject to a resolutory condition

66. I. Agency may be express, or implied from the acts of the principal, from his silence or lack of action,
or his failure to repudiate the agency, knowing that another person is acting on his behalf without
authority.
II. Agency may be oral, regardless of any law requiring a specific form
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

67. Agency may be implied from any of the following, except:

a. Acts of the principal
b. Principal’s silence
c. Stipulation
d. Principal’s failure to repudiate the agency

68. One who clothes another with apparent authority as his agent, and holds him out to the public as such,
cannot be permitted to deny the authority of such person to act as his agent, to the prejudice of
innocent third parties dealing with such person in good faith, and in the honest belief that he is what
he appears to be
a. General agency
b. Express agency
c. Implied agency
d. Agency by estoppel

69. I. 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
II. Between persons who are absent, the acceptance of the agency cannot be implied from the silence
of the agent
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

70. Between persons who are absent, the acceptance of the agency cannot be implied from the silence of
the agent, except:
I. When the principal transmits his power of the attorney to the agent, who receives it without any
objection

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II. When the principal entrusts to him by letter or telegram a power of attorney with respect to the
business in which he has habitually engaged as an agent, ad he did not reply to the letter or
telegram
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

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