C PA R
CPA Review School of the Philippines
FIRST PRE-BOARD EXAMINATION
Regulatory Framework for Business Transactions
July 15, 2023
Atty. DO Dela Cruz
1. May PDIC proceed directly to liquidation of a closed bank even without undergoing 90-day
receivership period?
a. No because it is violative of right to property of the owners of the bank
b. No because it is violative of right to procedural due process of the owners of the bank
c. Yes because it would enhance the recovery rate for creditors of closed bank
d. Yes because it would result to further dissipation of assets of a closed bank
2. Which of the following deposits is not insured by PDIC?
a. Savings Deposit in Metrobank
b. Certificate of Time Deposit in Philippine National Bank
c. Bank Deposit in Tokyo Bank which is operating outside Philippine territory
d. Special Savings in Bank of Philippine Islands
3. C has the following deposit accounts in a closed bank:
What is the maximum deposit insurance coverage by PDIC in so far as Colleen Garcia is
concerned?
a. P1,000,000
b. P816,667
c. P500,000
d. 616,667
4. Ana is a partner of ABC Partnership. She is also a stockholder of Ana Corporation. Ana has the
following accounts in a closed bank:
What is the maximum deposit insurance coverage by PDIC in so far as Ana is concerned?
a. P666,667
b. P950,000
c. P800,000
d. P1,000,000
5. What us the prescriptive period for depositors to file their deposit insurance claims to PDIC from
dare of takeover by PDIC of a closed bank?
a. Within 2 years from PDIC’s takeover of the closed bank
b. Within 1 years from PDIC’s takeover of the closed bank
c. Within 3 years from PDIC’s takeover of the closed bank
d. Within 4 years from PDIC’s takeover of the closed bank
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6. What is the maximum period for payment by PDIC to depositors of their claims from a closed
bank in order not to make PDIC’s officer liable for failure to pay due to grave abuse of
discretion, gross negligence, bad faith or malice?
a. Within 2 years from the date of filing of deposit insurance claim to PDIC
b. Within 1 year from the date of filing of deposit insurance claim to PDIC
c. Within 6 months from the date of filing of deposit insurance claim to PDIC
d. Within 3 months from the date of filing of deposit insurance claim to PDIC
7. What is the effect of payment by PDIC of insured deposits to depositors?
a. PDIC may recover from the assets of the closed bank in so far as the payment made by PDIC
is beneficial to depositors
b. PDIC shall be legally subrogated to all rights of depositor against the closed bank to the extent
of such payment
c. PDIC may not recover from the assets of the closed bank if the payment is without the
knowledge or against the will of the closed bank
d. PDIC may only recover from the assets of the closed bank if the payment is with the consent
of the closed bank
8. Under Republic Act No. 1405, the following instruments are considered absolutely confidential in
nature, except
a. Savings deposit
b. Time deposit
c. Current account
d. Money market placement
9. Under Foreign Currency Act of the Philippines or R.A. 6426, what is the only exception for the
absolutely confidential nature of Foreign Currency Bank Deposits?
a. Upon written permission or consent in writing by the depositor
b. In cases of impeachment of the President, Vice President, members of the Supreme Court,
members of the Constitutional Commission (Commission on Elections, Civil Service
Commission, and Commission on Audit) and the Ombudsman for culpable violation of the
constitution, treason, bribery, graft, and corruption, other high crimes or betrayal of public
trust. (Art. XI, Sec 2, 1987 Philippine Constitution)
c. Upon order of a competent court in cases of bribery or dereliction of duty of public officials
d. In cases where the money deposited or invested is the subject matter of the litigation
10. A non-resident alien was convicted beyond reasonable doubt of raping a minor. Such nonresident alien does not have properties in the Philippines except a foreign currency deposit with a
domestic bank. May the court issue a writ of garnishment of the foreign currency deposit of that
convicted nonresident alien?
a. No because Foreign Currency Deposit Act of the Philippines provides that foreign currency
deposits are exempted from attachment or garnishment
b. Yes but only if the non-resident alien will give his permission or consent in writing
c. Yes because if that foreign currency deposit will be exempted from garnishment, injustice
would result especially to a citizen aggrieved by a foreign guest
d. No because foreign currency deposits are absolutely confidential in nature and making an
exemption to the confidentiality of foreign currency deposits will discourage foreign
investments
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11. They include credits or deposits of money, bullion, security or other evidence of indebtedness of
any kind, and interest thereon with banks in favor of any person known to be dead or who has not
made further deposits or withdrawals during the preceding 10 years or more.
a. Dormant accounts
b. Unclaimed balances
c. Dead accounts
d. Closed deposits
12. What petition may be filed by the Office of Solicitor General on behalf of the Republic of the
Philippines in order to forfeit unclaimed balances of a person who, dying intestate and leaving no
heir entitled to his estate?
a. Petition for escheat
b. Petition for quo warranto
c. Petition for mandamus
d. Petition for certiorari
13. Unless demonetized, which of the following statements concerning the maximum legal tender in
the Philippines jurisdiction is incorrect?
a. For five centavos, 10 centavos, and 25 centavos - Up to P200 maximum legal tender
b. For P1 coin, P5 coin, P10 coin, and P20 coin - Up to P2,000 maximum legal tender
c. For P20, P50, P100, P200, P500, and P1,000 bills or notes - Unlimited legal tender
d. Manager's check and cashier checks are as good as cash and can be considered legal tender
14. Check will produce payment under any of the following cases, except
a. When the check is cleared and credited to the account of the holder
b. When the check is encashed
c. When the check is impaired through the fault of the creditor causing damage to the debtor
d. When the check become stale
15. This principle means that the Bangko Sentral ng Pilipinas shall exchange, on-demand and
without charge, Philippine currency of any denomination for Philippine notes and coins of any
other denomination requested.
a. Interconvertibility of currency
b. Interchangeability of currency
c. Interreplaceability of currency
d. Intermovement of currency
16. What is the minimum age of notes and coins that may justify the Bangko Sentral in calling them
for replacement?
a.
b.
c.
d.
More than five years old for notes and more than ten years for coins
More than one year old for notes and more than two years for coins
More than three years old for notes and more than six years for coins
More than four years old for notes and more than eight years for coins
17. Who shall be appointed as receiver and liquidator of a bank?
a.
b.
c.
d.
Philippine Depositors Insurance Corporation
Development Bank of the Philippines
Land Bank of the Philippines
Philippine National Bank
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18. It refers to a crime committed by any person who knowing that any monetary instrument or
property represents, involves, or relates to the proceeds of any unlawful activity, transacts,
converts, transfers, disposes of, moves, acquires, possesses, or uses said monetary instruments or
proceeds of any unlawful activity.
a. Estafa
b. Forgery
c. Money laundering
d. Bribery
19. Which of the following is not an element of violation of BP 22 for issuance of worthless check
or no sufficient fund (NSF) check?
a. There must be making, drawing, and issuance of any check to apply for account or for value
b. There must be knowledge of the maker, drawer, or issuer that at the time of issue he does not
have sufficient funds in or credit with the drawee bank for the payment of the check in full
upon its presentment
c. There must be subsequent dishonor of the check by the drawee bank for insufficiency of
funds.
d. There must be criminal intent to defraud on the part of the drawing of the check
20. What is the legal obligation on the part of the drawer of a funded check in order to exempt
himself from criminal liability for bouncing check?
a. He must keep sufficient fund or maintain credit to cover the full amount of the check within a
period of 90 days from the maturity date of the check
b. He must keep sufficient fund or maintain credit to cover the full amount of the check within a
period of 30 days from the maturity date of the check
c. He must keep sufficient fund or maintain credit to cover the full amount of the check within a
period of 60 days from the maturity date of the check
d. He must keep sufficient fund or maintain credit to cover the full amount of the check within a
period of 120 days from the maturity date of the check
21. What act may be presented by the maker or drawer of a check to destroy prima facie
presumption of knowledge of insufficiency of funds or credit?
a. The maker or drawer pays the holder thereof the amount due thereon, or makes arrangements
for payment in full by the drawee of such check within (10) banking days after receiving
notice that such check has not been paid by the drawee
b. The maker or drawer pays the holder thereof the amount due thereon, or makes arrangements
for payment in full by the drawee of such check within (15) banking days after receiving
notice that such check has not been paid by the drawee
c. The maker or drawer pays the holder thereof the amount due thereon, or makes arrangements
for payment in full by the drawee of such check within (5) banking days after receiving
notice that such check has not been paid by the drawee
d. The maker or drawer pays the holder thereof the amount due thereon, or makes arrangements
for payment in full by the drawee of such check within (20) banking days after receiving
notice that such check has not been paid by the drawee
22. What is the quantum of evidence required for awarding of civil damages for issuance of
worthless checks?
a. Probable cause or prima facie evidence
b. Clear and convincing evidence
c. Preponderance of evidence
d. Proof beyond reasonable doubt
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23. Which of the following characteristics of contracts pertains to relativity of contract?
a. It means that the contractual provisions constitute the law between the parties. Obligations
arising from contracts have the force of law between the contracting parties and should be
complied with in good faith.
b. It means that the validity and performance of contract cannot be left to the will of only one of
the parties but must be mutually decided by all contracting parties
c. It means that the contract is binding only upon the contracting parties and their successors
such as heirs or assignees and third persons are not generally allowed to assail a contract
d. It means that the parties may establish such stipulations, clauses, terms, and conditions as they
may deem convenient provided they are not contrary to law, morals, good customs, public
order or public policy
24. An audit staff and an auditing firm orally entered into a contract of employment whereby it is
stipulated that overtime premium and holiday pay are waived. Is the waiver valid?
a. Yes because of mutuality of contract
b. Yes because of autonomy of contract
c. No because it is contrary to law and public policy
d. No because it is entered into orally but not in writing
25. A stipulation in a contract of loan providing for 10% interest per month is
a. Usurious
b. Unconscionable
c. Voidable
d. Rescissible
26. The contract provides that the determination of the performance is left to a third person. Is the
stipulation valid?
a. No because it is contrary to law, morals, good customs, public order or public policy
b. No because it violates mutuality of contract
c. Yes because the determination of the performance of contract may be left to a third person,
whose decision shall not be binding until it has been made known to both contracting parties
d. Yes because the determination of the third person is obligatory whether or not it is evidently
inequitable
27. What is the nature of contract to constitute a pledge, a deposit, a loan or a commodatum?
a. Real contract
b. Consensual contract
c. Formal contract
d. Solemn contract
28. An owner of hacienda did not authorized his wife and children to sell the said hacienda but upon
being informed that they had done so, instead of refusing to enforce the sale, he proceeded to
collect in installments the amount of promissory note given to the purchase. Can the buyer of the
hacienda enforce the contract of sale of land?
a. No because the contract is unenforceable considering the wife and children has no authority to
sell the land
b. No because the contract is rescissible considering that it is entered into to defraud the creditors
c. Yes because the contract is only voidable and therefore enforceable
d. Yes because the contract becomes enforceable upon the collection of the purchase price which
is considered an implied ratification
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29. It refers to the theory being followed by the New Civil Code of the Philippines for the
determination of moment of perfection of contract. It is the theory followed in Philippine
jurisdiction.
a. Manifestation theory - The contract is perfected from the moment the acceptance is declared or
made
b. Expedition theory – The contract is perfected from the moment the offeree transmits the
notification of acceptance to the offeror
c. Reception theory - The contract is perfected from the moment that the notification of acceptance
is in the hands of the offeror
d. Cognitive theory - The contract is perfected from the moment the offeree's acceptance comes to
the knowledge of the offeror
30. On July 14, 2023, A wrote a letter to B offering him to lease a building. On July 15, 2023, B sent
a letter to A advising him that his offer was accepted. This letter was received by A at 2:55 pm
that day. On the same day, in the morning, at 11:25. A had already written a letter to B,
withdrawing the offer to lease the building. The letter revoking the offer was received by B at
3:55 pm. Is the contract perfected?
a. Yes because the offer was accepted by B before the revocation was received by him
b. Yes because the contract is perfected from the moment B sent the letter of acceptance
c. No because before the acceptance is known, the offer can be revoked, it not being necessary,
in order for the revocation to have the effect of impeding the perfection of the contract, that it
be known to the offeree
d. No because the contract is perfected only by the execution of written contract
31. A department store advertises a Christmas sale of men’s and women’s socks, those of men at the
price of P20 and above, and those of women’s at P10 and above. Can anyone of the public make
an acceptance of the offer?
a. Yes because business advertisements of things for sale are definite offers
b. No because business advertisements are mere invitations to make an offer
c. Yes because one who advertises is estopped
d. No because an offer cannot be made through an advertisement
32. What is the effect when both parties use fraud reciprocally?
a. Any of the parties may ask for annulment of contract
b. The contract is voidable for both parties
c. The fraud of one compensates that of the other, and neither party can ask for annulment of the
contract because they are in pari delicto
d. Any of the parties may ask for damages
33. Which of the following statements is incorrect?
a. The statement of a false cause in contracts shall render them void, if it should not be proved
that they were found upon another cause which is true and lawful
b. Although the cause is not stated in the contract, it is presumed that it exists and is lawful,
unless the debtor proves the contrary
c. As a general rule, lesion or inadequacy of cause shall invalidate a contract
d. The particular motives of the parties in entering into a contract are different from the cause
thereof
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34. The following are the rules for interpreting or construing a contract, except
a. Words which may have different signification shall be understood in that which is most in
keeping with the nature and object of the contract
b. The usage or custom of the place shall be borne in mind in the interpretation of the
ambiguities of a contract, and shall fill the omissions of stipulations which are ordinarily
established
c. The interpretation of obscure words or stipulations in a contract shall not favor the party who
caused the obscurity
d. Whenever the contract provided for payment of penalty in case of breach, it shall be
interpreted liberally in favor of the awarding of penalty
35. Indicate the proper order from least defective to most defective contract
I. Rescissible contract is a contract that has caused a particular damage to one of the parties or to
a third person, and which for equitable reasons may be set aside even if it is valid
II. Voidable or annullable contract is contract in which the consent of one party is defective,
either because of want of capacity or because it is vitiated, but which contract is valid until
set aside by a competent court
III. Unenforceable contract is a contract that for some reason cannot be enforced, unless it is
ratified in the manner provided by law
IV. Void or inexistent contract is an absolute nullity and produces no effect, as if had never been
executed or entered into and cannot be ratified
a. IV-III-II-I
b. I-II-III-IV
c. II-I-IV-III
d. I-III-II=IV
36. The following are the rules to be observed in counting the 4-year period for prescription of an
action for annulment, except
a. In cases of intimidation, violence, or undue influence, 4-year period shall begin from the time
the defect of the consent ceases
b. In cases of fraud or mistake, 4-year period shall begin from the time of the discovery of the
same
c. In cases of contracts entered into by wards or incapacitated persons, 4-year period shall begin
from the time the guardianship or incapacity ceases
d. For all voidable contracts, 4-year period shall be counted from the date of contract
37. The following statements pertaining to the effects of annulment of contract are correct, except
a. The contracting parties shall restore to each other the things which have been the subject
matter of the contract with their fruits and the price with interests
b. In obligations to render service, the value thereof shall be the basis for damages
c. When the defect of the contract consists in the incapacity of one of the parties, the
incapacitated person is not obliged to make any restitution except insofar as he has been
benefited by the thing or price received by him
d. Annulment of contract may be availed to by the capacitated contracting party or by the
contracting party who vitiated the consent of the other party
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38. The following statements concerning ratification of unenforceable contracts are true, except
a. The sale made by a person without authority of the owner is unenforceable in the beginning
but afterwards it becomes perfectly valid by the ratification of the owner
b. Contracts infringing Statue of Frauds are ratified by the failure to object to the presentation of
oral evidence to prove the same or by the acceptance of benefits under them
c. When a contract is enforceable under the Statue if Frauds, and a public document is necessary
for the registration in the Registry of Deeds, the parties may compel each other to execute the
required form
d. Motion to dismiss may still be availed in an action filed for exact fulfillment even if the
contract has already been ratified
39. What is the remedy of the injured party in case of null and void contracts?
a. Action for rescission of contract
b. Action for declaration of nullity of contract
c. Action for annulment of contract
d. Action subrogatoria
40. What is the status of contract of lease of public streets or thoroughfares entered by a city
government with private market stallholders?
a. Voidable
b. Perfectly valid
c. Unenforceable
d. Null and void
41. Which of the following is not correct?
a. A solidary creditor can assign his rights even without the consent of the other creditors
b. Remission of debt by any of the solidary creditors shall extinguish the obligation
c. If two or more solidary debtors offer to pay, the creditor may choose which offer to accept
d. The debtor may pay any of the solidary creditors but if any demand has been made by one of
them, payment should be made to him
42. Which of the following is correct?
a.
b.
c.
d.
The effect of a conditional obligation to give, once the condition has been fulfilled, shall
retroact to the day of the constitution of the obligation
If the obligation is unilateral, the fruits and interest during the pendency of the condition
shall be deemed to have been mutually compensated
If the obligation imposed is reciprocal prestations upon the parties, the debtor shall
appropriate the fruits and interests received, unless from the nature and circumstances of the
obligation it should be inferred that the intention was different
In an obligation to do and not to do, the parties shall determine, in each case the retroactive
effect of the condition that has been complied with
43. A orally offered to sell his rice land to B for P8M. B orally accepted the offer. The land is to be
delivered through the execution of a notarized Deed of Sale and the price is to be paid directly
two weeks from their oral agreement. Which of the following is most accurate?
a.
b.
c.
d.
If A refuses to deliver the land on the agreed date despite payment made by B, the latter may
not successfully sue A because the contract is unenforceable
If A refused to deliver the land, B may successfully sue A for the fulfillment of the obligation
before the payment of the purchase price
The contract between A and B is rescissible
The contract between A and B is subject to ratification by the parties
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44. A owes B P100,000 which is already due and demandable. Later, through violence and
intimidation, A forced B to sign a promissory note which reads, “I promise to pay A P150,000 on
August 10, 2022. Sgd. B”. On August 10, 2022, how much can A collect from B?
a. P50,000
b. P100,000
c. P150,000
d. P0
45. 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 payment of the unpaid
obligation amounting to P120,000 and a writ of attachment was issued and the piano was sold for
P100,000. Can S still recover the deficiency?
a.
b.
c.
d.
Yes, even without stipulation
Yes, only if stipulated that in case of foreclosure the buyer will pay any deficiency
No, even if stipulated
No, unless there is stipulation
46. An agreement where the pledgor or mortgagor will execute a contract transferring ownership of
the property pledged or mortgaged to the pledgee or mortgagee in case of default, such execution
of the contract will result to
a. Pactum commissorium
b. Payment by cession
c. Dacion en pago
d. Tender of payment
47. If by virtue of a final judgment based on a right prior to the sale, the vendee is deprived of the
thing purchased, which of the following is correct?
a. The vendee should appeal the decision to make the vendor liable
b. The vendor is not liable if the vendee has renounced the right to warranty against eviction
c. The vendor shall answer for the eviction even though nothing has been said on the object
d. The vendor may give another thing equally satisfactory
48. A, B, and C solidarily owe W and Y, solidary creditors P24,000, where the share of the debtors is
2:3:5 while the creditors is 1:2. The terms of the contract provide:
I. A will pay if Y passes the October 2023 CPA Board Examinations
II. B will pay on December 20, 2023
III. C will pay on July 14, 2023
On July 14, 2023, W can collect from
a.
b.
c.
d.
A = P24,000
B = P12,000
C = P24,000
C = 8,000
49. Using the above data, the debtor who effected payment is entitled to get reimbursement from
a. B = P12,000
b. A = P12,000
c. C = P12,000
d. A or B = P12,000
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50. Assuming Y passed the October 2023 CPA Board Exams, Y can collect from
a. A or C = P16,800
b. B = P4,800
c. A = P12,000
d. A or B or C = P12,000
51. In January 2014, S, 15 years old, sold his only watch to B, 21 years old. The sale was without the
knowledge of G, guardian of S. Assuming that an annulment case is filed today, which is correct?
a. S may bring the action for annulment
b. G may bring the action for annulment
c. B may bring the action for annulment
d. Annulment will not prosper whoever will file it
52. A and B are solidary debtors of C for P100,000 which is due on August 1, 2023. Thinking that the
obligation is already due, A paid C P100,000 on August 1, 2022. What rights will A have on
February 1, 2023?
a. A can recover P50,000 reimbursement from B without interest
b. A can recover P100,000 from C plus interest from August 1, 2022 to February 1, 2023
c. A can recover P500,000 reimbursement from B with interest from August 1,2022 to February
1, 2023
d. A cannot recover yet from either B because the obligation is not due yet or C because the
payment was voluntary
53. Using the preceding number, but it is already September 1, 2023, which of the following is
correct?
a. A can recover from C only the interest from August 1, 2022 to July 31, 2023
b. A can recover P50,000 from B plus interest from August 1, 2022 to August 1, 2023
c. A can recover P50,000 from B plus interest from August 1, 2022 to September 1, 2023
d. A can recover from C only the interest from August 1, 2022 to September 1, 2023
54. A sold his car to B payable in ten equal monthly installments and with a mortgage constituted on
the same property. For B’s failure to pay a month’s installment, which is correct? A may
a. Foreclose the mortgage on B’s car but he has no longer the right to recover the balance should
it be sold for an amount lower than what he claims from B
b. Seek the cancellation of the sale made to B
c. Seek fulfillment of the obligation of B to pay the entire purchase price
d. Seek the cancellation of the sale and later on foreclose the mortgage should he find it
impossible to collect from B
55. Which of the following is a valid stipulation?
a. A promises to give B P10,000 if B will have sexual intercourse with her for one week
b. A will give B P10,000 and if A fails, A will go to planet Saturn within the year
c. A agreed to give B a house and lot if B will kill A’s wife
d. A agreed to put poison on the food of B’s wife and if A fails, he will pay B P10,000 for
damages
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56. A sold to B a house and lot for P5M payable 30 days after the execution of the deed of sale. It was
expressly agreed in the deed that the sale would ipso facto be of no effect upon B’s failure to pay
as agreed. B failed to pay on maturity, and A sued to declare the contract of no force and effect. If
B tendered payment before the action was filed but subsequent to the stipulated date of payment,
would the action prosper?
a.
b.
c.
d.
Yes, contracts shall have the force of law between contracting parties
No, the stipulation is void for being contrary to law
No, at the time B tendered payment of the purchase price, there was still no demand made
upon him by A for the payment of the said purchase price either judicially or by notarial act
Yes, the stipulation that upon failure to pay the price agreed upon the rescission of the contract
shall of the right take place, shall bind both contracting parties
57. The liability of judgment debtor A under an obligation imposed by a final judgment is to pay
P10,000 but A and the judgment creditor B subsequently entered into a contract reducing the
liability of A to only P8,000. Which if the following is correct?
a. There is an implied novation because the existing obligation is extinguished
b. Novation result in the extinguishment of an existing obligation and new one is substituted in
its place
c. The payment by C of the original amount requires A to reimburse P10,000
d. The agreement to reduce the judgment debt to P8,000 completely extinguish the judgment
debt and released A from his pecuniary liability
58. What is the similarity between contract of sale and dacion en pago?
a. The law that governs them
b. The cause of obligation
c. The object of obligation
d. The motive of the parties
59. Denver Nuggets entered into a contract with Adidas Inc to provide two pairs of basketball shoes
for Caldwell-Pope and Nikola Jokic. No pair was, however, available at the time of perfection
of the contracts. Pope wears 12” basketball shoes which Adidas normally manufactures for the
general market while Jokic wears 20” basketball shoes which will be specially manufactured
for him. What contracts are entered into by the parties?
a. Both contracts of sale
b. Both contracts for a piece of work
c. Contract of sale for Pope’s shoes and contract for a piece of work for Jokic’s shoes
d. Contract of sale for Jokic’s shoes and contract for a piece of work for Pope’s shoes
60. In sale, the cause or consideration is in money while in barter, the cause or consideration is
another thing. However, where the consideration is partly in money and partly in another thing,
the following are the rules to be observed, except
a.
b.
c.
d.
The contract shall be one of sale or barter depending upon the manifest intention of the
parties
If the intention of the parties does not clearly appear, the contract is one of barter if the value
of the other thing given as part of the consideration exceeds the monetary consideration
If the intention of the parties does not clearly appear, the contract is one of sale if the
monetary consideration is more than the value of the other thing given as part of the
consideration
If the intention of the parties does not clearly appear, the contract is one of barter if the
monetary consideration is equal to the value of the other thing given as part of the
consideration
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61. The following are the distinctions between contract of sale and contract to sell, except
a. In contract of sale, ownership passes to the buyer upon delivery while in contract to sell, the
title to the goods does not pass to the buyer until some future time and often times upon
payment of the price
b. In contract of sale, the risk of loss or damage to the goods upon delivery is on the buyer, under
the rule " res perit domino", or the thing perished with the owner; while in contract to sell, the
risk is borne by the seller based on the same principle that the thing perishes with the owner
c. In contract of sale, the non payment of the price is a resolutory condition while in contract to
sell, the payment in full of the price is a suspensive condition
d. The rule on double sale applies to contract to sell while contract of sale are not covered by
rule on double sale
62. On January 1, 2023, S sold to B a specific car owned by Y for P200,000. S promised to deliver the
car to B on January 11, 2023. S bought the car from Y on January 10, 2023 and delivered it to B
on January 11, 2023. Is the contract of sale between S and B valid?
a. No because there is no delivery of the car on January 1, 2023 which is an essential requisite of
a contract of sale
b. No because the seller or vendor should be the owner of the thing sold at the time of perfection
of contract
c. Yes even if S is not the owner of the thing sold on January 1, 2023 because future thing can be
the object of a contract of sale
d. Yes because the vendor does not need to possess the title to the thing sold at the perfection of
the contract but he must have the right to transfer ownership of the thing at the time the
things is to be delivered
63. S sold lottery ticket Nos. 1-1000 to B on January 2, 2023. The draw was already made on January
1, 2023 and ticket Nos. 1-1000 did not win. B purchased the tickets to be used as buntings for
birthday celebration of his daughter. Is the contract of sale between S and B valid?
a. Yes because it involves emptio spei or sale of mere hope
b. No because the sale of vain hope or expectancy is void
c. No even if the ticket is considered collector’s item
d. Yes because the essential elements of contract of sale are present
64. There may be a sale of an undivided share of a specific mass of fungible goods though the seller
purports to sell and the buyer purports to buy a definite number, weight or measure of goods in
the mass, and though the number, weight or measure of the goods in the mass is undetermined.
Which of the following rules is correct?
I. If the quantity, number, weight or measure of the mass is more than the quantity sold, the
parties shall become co-owners of the mass
II. If the quantity of the mass is less than the quantity sold, the buyer becomes the owner of the
whole mass, with the seller being bound to make good the deficiency from goods of the same
kind and quality, unless a country intent appears
a. I only
b. II only
c. Neither I nor II
d. Both I and II
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65. S sold to B a specific shirt. The price of the shirt cannot be determined. The shirt has been
delivered to and appropriated by B. What is the obligation of B?
a. B has no obligation because the contract of sale is null and void having no price
b. B has no obligation because the contract of sale is inefficacious because the price of the shirt
cannot be determined
c. B has the obligation to rescind the contract
d. B has the obligation to pay a reasonable price which depends on the circumstances of each
particular case
66. By bidders or puffers refer to persons employed by the seller to bid in his behalf, the purpose of
which is to raise the price, but the said persons are not in themselves bound by their bids. What
is the effect of employment by the seller of by bidders or puffers without notice to the other
bidders in a perfected contract of sale by auction?
a. The sale may be considered voidable
b. The sale is considered null and void
c. The sale is unenforceable
d. The sale is rescissible
67. It refers to the consideration paid for the purpose of holding one to his promise to buy or sell a
determinate thing for a certain period of time, which consideration is separate and distinct from
the purchase price.
a. Option money
b. Earnest money
c. Down payment
d. Arras
68. S sold his ring to B for P50,000 under the following terms: down payment of P30,000 and the
balance payable at month end. As security, B executed a chattel mortgage on the ring. B
defaulted in the payment of the balance. By reason thereof, S foreclosed the chattel mortgage on
the ring. However, only P15,000 was realized in the foreclosure sale. Can S still proceed against
B to collect the deficiency of P5,000?
a. No because Recto Law prohibits recovery of deficiency
b. Yes if deficiency has been agreed upon contrary to Recto Law
c. Yes because Recto Law does not apply to sale on straight term and the general rule is that if
the foreclosure sale in chattel mortgage results in deficiency, the same may be recovered by
the creditor
d. No because recovery of deficiency is only available in execution sale
69. A sold a residential house and lot at a price of P10,000,000 payable at P4,000,000 downpayment
and the balance of P6,000,000 payable in 50 years at P10,000 per month to B. After, total
payments of P4,120,000, B defaulted on the next installment. After following the necessary
procedures required by law, the contract of sale is properly cancelled. How much cash surrender
value is B entitled from A?
a.
b.
c.
d.
P4,060,000
P2,160,000
P4,000,000
P0
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70. A sold a residential house and lot at a price of P10,000,000 payable at P4,000,000 downpayment
and the balance of P6,000,000 payable in 50 years at P10,000 per month to B. After total
payments of P5,200,000, B defaulted on the next installment. After following the necessary
procedures required by law, the contract of sale is properly cancelled. How much cash surrender
value is B entitled from A?
a.
b.
c.
d.
P4,400,000
P3,600,000
P4,200,000
P3,900,000
71. S, a minor of 17 years, sold his watch for P1,500 to B, 30 years old. The guardian of S was not
aware of the sale, hence, no action for annulment has yet been filed, Subsequently, B sold the
watch to T who acquired it in good faith. Which of the following statements is correct?
a. T acquires no title to the watch because the seller's title is voidable
b. T acquires good title to the watch even if he buys it in bad faith
c. T acquires good title to the watch even if the voidable title of the seller has been avoided
before the time of sale as long as T acquires the watch in good faith, for value and without
notice of seller's defect of title
d. T acquires good title to the watch even if the seller's title is voidable provided the same has
not been avoided at the time of sale and T acquires the watch in good faith, for value and
without notice of seller's defect of title
72. When adverse possession of the thing subject of the contract of sale had been commenced before
the sale but acquisitive prescriptive period is completed after the transfer to the buyer, is the
vendor still liable to the buyer in case the buyer is evicted from the properties sold by virtue of
acquisitive prescription?
a. The vendor is not liable for eviction
b. The vendor shall always be liable for eviction
c. The vendor is liable for eviction only if there is expressed warranty for eviction
d. The mentor is liable for eviction even if there is no expressed warranty for eviction
73. If there is stipulation exempting the vendor from the obligation to answer for eviction and the
vendor acted in good faith and the waiver by vendee/buyer is without the knowledge of the risk
of eviction also known as waiver consciente, what shall be the liability of the vendor in case of
eviction?
a. Vendor shall be liable for value of the things at the time of eviction plus income or fruits
b. Vendor shall be liable for value of the things at the time of eviction
c. Vendor shall be liable for value of the things, income or fruits and damages and interests
d. Vendor shall not be liable for anything
74. If at the time of the execution of the pacto de retro sale there should be no fruits on the land, who
shall be entitled to those fruits which still exist at the time of redemption by vendor a retro?
a. It shall inure to the benefit of the vendor a retro/redemptioner if no indemnity was paid by the
vendee a retro when the pacto de retro sale was executed
b. The vendor a retro/redemptioner shall reimburse the amount of the fruits to the vendee a retro
c. The fruits shall be prorated to the vendor a retro and vende a retro based on the prorated
period of possession
d. It shall inure to the benefit of the vendee a retro considering that he has previously obtained
possession of the goods
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75. Is there a contract of sale when you buy a can of soft drink and sandwich from a vending
machine?
a. No, because there is only one party - the buyer
b. No, because the vending machine cannot be a seller
c. Yes, there can be a sale even if there is only one party
d. Yes, because there are two parties - the buyer and the seller
76. A went to B’s boutique to buy a wedding dress, but not finding one suiting her liking, she asked
the shop owner to make one for her using a special fabric. The cost of the gown is P100,000.
The boutique thus ordered the fabric and made the gown. Unfortunately, the wedding did not
push through and A refused to accept the gown claiming that the agreement was unenforceable
not being in writing. However, the boutique owner asserts that the contract is enforceable. Is the
boutique owner correct?
a. Yes, the contract is enforceable because the contract does not fall within the purview of the
Statute of Frauds.
b. No, the contract is unenforceable because any contract whose amount is more than P500.00
should be in writing
c. No, the contract is void because any contract whose amount exceeds P5,000.00 should be in a
public instrument to be valid
d. No, the contact is rescissible because of the damage suffered by the boutique owner.
77. S sells to B 200 sacks well milled rice from his stock in his warehouse containing 600 sacks. The
200 sacks of well milled rice have not yet been physically segregated. What is the effect of the
sale of 200 sacks of well milled rice from the mass?
a. B becomes the owner of 200 sacks of well milled rice from the mass upon the execution of the
sale
b. S and B become co-owners of the whole mass
c. B becomes the owner of 200 sacks of well milled rice only upon delivery to him
d. B becomes the temporary owner of the whole 600 sacks of well milled rice until 200 sacks
have been delivered to him
78. The following statements except one pertain to an auction without reserve, which is the
exception?
a. The auctioneer has to award the sale to the highest bidder
b. The auctioneer is the offeror and the bidders are the offerees
c. After the auctioneer calls for bids on an article or lot, that article or lot may be withdrawn
d. It is specifically announced to be without reserve
79. Tin purchased a pair of shoes from the Rusmart Department Store. In making the purchase, Tin
used her credit card. When did Tin acquire ownership of the shoes?
a. When the pair of shoes was handed to her by the cashier who processed her payment by credit
card
b. When her credit card purchase was entered by the cashier in the sales register
c. When she received her billing from the credit card company
d. When she pays her bills to the credit card company
80. The buyer is entitled to the fruits of the thing sold from the time:
a. Of the perfection of the contract of sale
b. The buyer has paid the purchase price in full
c. The obligation of the seller to deliver the thing sold arises
d. The parties have acknowledged the deed of sale before a notary public
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81. Three of the following modes of delivery apply to movable property only. Which mode of
delivery applies to both movable and immovable property?
a. Traditio simbolica
b. Traditio brevi manu
c. Traditio longa manu
d. Traditio constitutum possessorium
82. Sale or return is different from sale on trial because sale or return:
a. Is subject to a suspensive condition
b. Depends upon the quality of the goods
c. Results in the transfer of ownership and risk of loss upon delivery of the goods to the buyer
d. Becomes a sale only after some future time
83. Yuki stole the necklace of Lilo. Later, he sold the necklace to Shi who was not aware that the
necklace was stolen. Which is correct?
a. Shi did not acquire title to the necklace
b. Lilo can get back the necklace from Shi without need of reimbursement
c. Both a and b are correct
d. Shi acquired title to the necklace but Lilo can get it from Shi but must reimburse the latter for
the purchase price
84. Paris, a Japanese tourist, lost his camera while he was sightseeing in Manila Bay. The following
day, at the lobby of the Oragon Hotel where he was billeted, he saw Pat, another tourist, holding a
camera which looked like the camera he had lost. He was very positive that it was his lost camera.
It turned out that Pat bought the camera from Christine Sari Sari Store who earlier bought it from a
tourist guide who found the camera.
a. Paris may get back the camera without the need for reimbursing Pat for the purchase price the
latter paid
b. Paris may get the camera but he must reimburse Pat for the purchase price’
c. Paris cannot get the camera even if he is willing to reimburse because Pat bought it from a
“merchant’s store”
d. Paris can no longer get the camera because Pat bought it in good faith
85. A warehouse receipt indicates on its face that the goods it covers are “Deliverable to the order of
Joyce”. Joyce, however, stamped “Non-negotiable” on the face of the warehouse receipt. What
is the effect of such marking on the warehouse receipt?
a. The warehouse receipt is rendered non-negotiable
b. The warehouse receipt is rendered void
c. The warehouse receipt remains to be negotiable
d. The warehouse receipt is considered not having been issued
86. Which of the following statements/phrases does not pertain to the doctrine of caveat emptor?
a. The buyer assumes the risk in making a purchase
b. Let the buyer beware
c. The buyer cannot generally recover from the seller for defects in the product
d. The seller generally makes certain warranties concerning a product
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87. Legal redemption by a co-owner or an adjoining owner of a rural or urban land is available when
the ownership of the property subject of the legal redemption has been transmitted by:
a. Dation in payment
b. Onerous title
c. Either by (a) or by (b)
d. Dation in payment or by gratuitous or onerous title
88. The assignor of a credit warrants:
a. The collectibility of the credit
b. The existence of the credit and solvency of the debtor
c. Both legality and existence of credit
d. The solvency of the debtor and collectibility of the credit
89. Which of the following is not a characteristic of a barter?
a. Consensual contract
b. Nominate contract
c. Bilateral contract
d. Real contract
90. Barter or exchange has for its object:
a. Movable property
b. Immovable property
c. Either movable or immovable property
d. Intangible property
The End!
U.I.O.G.D.
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