COLEGIO DE DAGUPAN

Arellano Street, Dagupan City

School of Business and Accountancy

SEMI-FINALS EXAMINATION
Regulatory Framework for Business Transaction - Sales

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

a. Real - It is perfected by delivery of the subject matter.
b. Reciprocal - The cause of the other party is the object of the other party and vice versa.
c. Bilateral - Both the contracting parties have obligations to perform.
d. Principal - It can exist by itself without being dependent upon another contract.

2. On January 1, 2012, S sold to B a specific car owned by X for P50,000. S promised to deliver the
car to B on January 11, 2012. S bought the car from X on January 10, 2012 and delivered it to B
on January 11, 2012. Is the contract of sale between S and B valid?
a. Yes, even if X is not the owner of the thing sold on January 11, 2012 because future thing can
be the object of a contract of sale.
b. No, because the seller or vendor shall be the owner of the thing sold at the time of perfection
of contract.
c. Yes, because the vendor need not possess the title to the thing sold at the perfection of
the contract but he must have the right to transfer the ownership of the thing at the
time that the thing is to be delivered.
d. No because there is no delivery of the car on January 1, 2012 which is an essential requisite
of a contract of sale.

3. On January 1, 2012, D borrowed from C P100,000 and as a security D mortgaged his land to C.
On January 2, 2012, D sold the same land to X for P50,000 to be delivered on January 5,2012. D
failed to pay the loan. Is the contract of sale between D and X valid?

a. No, because D is no longer the owner of the land on January 2, 2012.

b. Yes, because D is still the owner of the land although it was mortgaged to C.
c. No, because D is no longer the owner of the land on January 5, 2012.
d. Yes, provided D will pay the amount due to C.

4. In case of doubt whether the contract of sale is one of emptio rei speratae or one of emptio spei,
how shall the contract be generally interpreted to?
a. Both A and B
b. Neither A nor B
c. Emptio spei
d. Emptio rei speratae

5. S sells to B 300 sacks of yellow corn from a mass stored in the warehouse of S. The mass,
however, actually consists of 280 sacks of yellow corn.Which of the following statements is
correct?
a. B becomes the owner of all the 280 sacks and S is not bound to deliver the additional 20
sacks.
b. The sale is null and void because there is no consent.
c. The sale is null and void because there is no determinate object.
d. B becomes the owner of all the 280 sacks and S is bound to deliver additional 20 sacks.
6. The following contracts of sale have prices which are certain and therefore valid, except
a. S sold to B a specific car the price of which is subject to determination of X, third person.
b. S sold to B 500 shares of ordinary stocks of BPI at the price equivalent to the closing price of
the ALI's ordinary shares on April 30, 2020 at the Philippine Stock Exchange.
c. S sold to B a specific watch for P2,500 which both parties agreed upon.
d. S sold to B a certain ring of which the price is the salary of the faculty member of La
Salle School.

7. Which of the following contracts of sale is null and void?

a. Executory oral sale of real property or any interest therein regardless of the price.
b. Sale of a piece of land by a third person in the name of owner but who has not been given any
authority
c. Executory oral sale of goods, chattels or things in action the price of which is P500 or more.
d. None of the above.

8. 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.

9. B purchased the car of S for P100,000 payable within 30 days from the date of sale. As a
downpayment, B gives S P1,000 upon the execution of their agreement. How much should B pay
to S on the 30th day?
a. P99,000 because the P1,000 is an earnest money.
b. P100,000 because the P1,000 is an eanest money.
c. P99,000 because the P1,000 is an option money.
d. P100,000 because the P1,000 is an option money.

10. On January 1, 2012, Seller and Buyer entered into a contract of sale of a specific cow. The
purchase price shall be paid on January 5, 2012 and the cow shall be delivered on January 10,
2012. The cow gives birth on January 4, 2012. The cow and its young have been delivered on
January 11, 2012. Which of the following statements is correct?
a. The buyer has real right over the cow and its young on January 1, 2012.
b. The buyer has personal right over the young on January 5, 2012.
c. The buyer has personal right over the young on January 1, 2012 and real right over the
cow and its young on January 11, 2012.
d. The buyer has personal right over the young on January 10, 2012.

11. After the perfection of the contract of sale, who shall bear the risk of loss of the object of the
contract of sale before the delivery?
a. Buyer because the ownership of the goods is transferred to the buyer after the perfection of
the contract of sale.
b. Buyer because any benefit therefrom during the same period inures to him.
c. Seller because goods remain at the seller's risk until the ownership of the goods is
transferred to the buyer by actual or constructive delivery.
d. Seller because any benefit therefrom during the same period inures to him.
12. S sold his only car to B for P100,000 payable in 10 equal monthly installments of P10,000 each.
As security, B executed a chattel mortgage on the car. What is the remedy if B fails to pay one
installment?
a. Cancel the sale.
b. Exact fulfillment of the obligation with recovery for deficiency.
c. Foreclose the chattel mortgage on the thing sold, if one has been constituted without right to
recover any deficiency.
d. Any of the above.

13. S sold his only car to B for P100,000 payable in 10 equal monthly installments of P10,000 each.
As security, B executed a chattel mortgage on the piano. After B defaulted in at least two
installments, S foreclosed the chattel mortgage on the piano and there is deficiency. Can S
recover the deficiency?
a. Yes provided there is stipulation to that effect.
b. No even without stipulation to that effect.
c. Yes even without stipulation to that effect.
d. No because that will be contrary to law.

14. B rented the specific truck of S. After the end of the contract, S sold the property to B. As a result
of sale, B continues to have possession of the property. What type of constructive delivery is
present?
a. Traditio simbolica or clavium
b. Traditio longa manu
c. Traditio brevi manu
d. Traditio constitutum possessorium

15. Intangible assets or incorporeal property cannot be the subject of actual or physical delivery. The
following are the different modes of constructive delivery of incorporeal property or intangible
assets, except
a. By constructive traditio such as execution of public documents.
b. By placing the titles or tangible of ownership in the possession of the vendee such as delivering
certificate evidencing the incorporeal property from the seller to the buyer.
c. Through the use by the buyer of the rights pertaining to incorporeal property with the consent
of the seller.
d. Through pledging of the intellectual property by the pledgor to the pledgee.

16. On January 1, S delivered an electronic calculator to B under a sale or return arrangement. S gave
B up to May 7 to return the electronic calculator. Before May 7, the calculator was destroyed by
fire. Should B pay for the purchase price?
a. No because B is not yet the owner of the calculator.
b. No because the calculator is destroyed through fortuitous event.
c. Yes because B becomes the owner of the calculator upon delivery.
d. Yes if the fire is due to the fault of B.
17. Lebron is the registered owner of a vacant lot. Kevin stole the certificate of title of the registered
lot of Lebron and through connivance with a notary public, he was able to execute a notarized
deed of sale through forging the signature of Lebron. With connivance with a Registry of Deeds,
Kevin was able to transfer the title of the lot to his name. Afterwards, Kevin sold the said lot to
Carmelo who acquired the said lot after inspecting the title and the vacant lot. Carmelo is a
purchaser in good faith and for value. Which of the following statements is correct?
a. The contract of sale between Kevin and Carmelo is void because it is the product of a
previous void contract.
b. Lebron can recover the land from Carmelo because the title acquired by Carmelo is that of a
thief even without reimbursing Carmelo.
c. Lebron can recover the land from Carmelo provided he will reimburse him for the price
Carmelo paid.
d. Lebron cannot recover the land from Carmelo because a forged document or deed of
sale, in case of registered lot, can be a root of a valid title if the title is already in the
hand of a purchaser for value and in good faith.

18. Manny, a Filipino, sold his private land to Ippo, a Japanese national. The contract of sale has
already been executed. Which of the following statements is correct?
a. The contract of sale is void because it is violative of Constitutional provision against
ownership of private land by foreigners. Therefore, Manny cannot ask for declaration of
nullity because of the principle of pari delicto.
b. The contract of sale is unenforceable because it is violative of Constitutional provision
against ownership of private land by foreigners.
c. Ownership of the land will transfer to Ippo and the contracts can no longer be avoided since
the contract is already executed.
d. Manny can still recover the land by filing an action for declaration of nullity because
the principle of pari delicto is not applicable in the case since it will frustrate the state
policy to reserve the land to Filipinos.

19. Naruto, a Filipino, sold his private land to Hinata, a Japanese national. Afterwards, Hinata sold
the said private land to Kakashi, a Filipino. Which of the following statements is correct?
a. Both contracts of sale are subject to declaration of nullity because they are violative of
Constitutional provision against ownership of private land by foreigners.
b. Both contracts of sale are unenforceable because they are violative of Constitutional
provision against ownership of private land by foreigners.
c. Ownership of the land will transfer to Kakashi and the contracts cannot be avoided
since the land is finally with a Filipino.
d. The second contract of sale is void because it is the product of the first contract of sale.

20. The following are the rules on the place of delivery of the goods in a contract of sale, except
a. Place stipulated in the contract.
b. In case there is no stipulation as to the place of delivery, place fixed by usage or trade.
c. In the absence of a and b, the seller's place of business if he has one; if none, the seller's place
of residence.
d. In the absence of a and b, the buyer's place of business if he has one; if none, the buyer's
place of residence.
21. The following are the instances when goods are no longer in transit and therefore the unpaid
seller can no longer exercise his right of stoppage in transitu, except
a. If the buyer obtains delivery of the goods before arrival at the appointed destination.
b. If the carrier or other bailee acknowledges to the buyer or his agent, that he is holding the
goods on his behalf, after arrival of the goods at their appointed destination.
c. If the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his agent.
d. If the goods are rejected by the buyer, and the carrier or other bailee continues in
possession of them, even if the seller has refused to receive them back.

22. It is not essential to the validity of resale that notice of an intention to resell the goods be given by
the seller to the original buyer. When shall the giving of notice of an intention to resell be
relevant in the exercise by the unpaid seller of the right to resell?
a. When the goods are of perishable nature.
b. When the buyer becomes insolvent
c. When the seller has expressly reserved the right to resell the goods in case the buyer should
make default.
d. When the buyer has been in default for an unreasonable time.

23. Where shall the reselling be made in case the unpaid seller exercises his right of resale?
a. Public sale
b. Private sale
c. Either public sale or private sale
d. Neither public sale nor private sale

24. The unpaid seller is bound to exercise reasonable care and judgment in making the resale. He
cannot, directly or indirectly, buy the goods. The following are the effects of resale, except
a. The seller shall not be liable to the original buyer for the delivery of the goods.
b. The seller may recover damages from the original buyer for any loss occasioned by the
breach of the contract of sale.
c. The original buyer shall be entitled for any profit made by such resale.
d. The new buyer acquires a good title against the original buyer.

25. The following are the requisites for right to rescind the sale to be available to an unpaid seller,
except
a. The buyer has defaulted in the payment of the purchase price.
b. The seller has no right of lien nor has stopped the goods in transitu.
c. Title to the goods has passed on to the buyer.
d. The grounds must be: 1.) The seller has expressly reserved the right to rescind the sale in case
the buyer should make default or 2.) The buyer has been in default in the payment of the price
for an unreasonable time.

26. In a sale of real estate with a statement of its area at the rate of a certain price per unit of measure
or number, the vendor shall deliver the area mentioned in the contract of sale. What is the remedy
of the buyer if the actual area is less than by an area less than 1/10 of that stated in the contract?
a. Ask for proportionate reduction in the price.
b. Ask for rescission of the contract of sale.
c. Either A or B
d. Ask for declaration of nullity of the contract of sale.
27. In sale of real estate for a lump sum and not at the rate of a certain sum for a unit of measure or
number, the vendor is bound to deliver all that it is included within the boundaries stated in the
contract although there be greater or less area or number than that stated in the contract. What
amount shall be paid by the vendee or buyer?
a. The lump sum stipulated in the contract with increase in the price if the area is greater than
that stated in the contract.
b. The lump sum stipulated in the contract with decrease in the price if the area is less than that
stated in the contract.
c. The lump sum stipulated in the contract with no increase or decrease in the price
although there be greater or less area or number than that stated in the contract.
d. None of the above

28. The following are the requisites or elements of double sale, except
a. Two or more valid contracts of sale occurred.
b. Two or more buyers must have all fully paid the price of the contract of sale.
c. Two or more buyers at odds over the rightful ownership of the subject matter must each
represent conflicting interests.
d. Two or more buyers at odds over the rightful ownership of the subject matter must each have
brought from the very same seller.

29. S sold his watch to B in a public document. However, B informed S that he would obtain actual
delivery of the watch after 3 days. The day after the same to B, S sold the same watch to X in a
private document and X immediately took possession of the watch. X was not aware of the same
to B. Who has a better right over the watch?
a. B because he has the older title.
b. B because he first took constructive possession of the watch in good faith.
c. X because he first took actual possession of the watch in good faith.
d. X because X has not registered the watch in good faith.

30. On March 1, S sold his unregistered lot to X. The deed of sale was in a private instrument. On
May 5, S sold again the said lot to Z in a private instrument. Z immediately registered the sale
with Register of Deeds on May 5. X took actual possession of the lot on May 6. X and Z were not
aware of the sale made to others. Who between the buyers has the better right?
a. X because he has the older title in good faith.
b. Z because he first took constructive possession in good faith.
c. Z because he is the first registrant in good faith.
d. None of the above.

31. The following are the effects if the suspensive condition in a contract of sale subject to a
suspensive condition is not fulfilled, except
a. The other party may refuse to proceed with the contract.
b. The non-performance of condition may be treated as a breach of warranty.
c. The other party may waive the performance of the condition.
d. The contract of sale is perfected if the condition is suspensive.
32. The following are the requisites in order that the seller's warranty against eviction may be
enforced, except
a. There must be a final judgment depriving the vendee of the whole or part of the thing
sold.
b. The vendee must appeal from the decision or judgment depriving him of the thing
sold.
c. The deprivation is based on a right prior to the sale or an act imputable to the vendor.
d. The vendor must have been notified of the suit for eviction at the instance of the vendee.

33. When adverse possession of the thing subject of the contract of sale had been commenced before
the sale but the prescriptive period is completed after the transfer, which is correct?
a. The vendor is liable for eviction only if there is expressed warranty for eviction.
b. The vendor is liable for eviction even if there is no expressed warranty for eviction.
c. The vendor is not liable for eviction.
d. The vendor shall always be liable for eviction.

34. Which stipulation is considered void?

a. Stipulation exempting a vendor from the obligation to answer for eviction even he is in
good faith.
b. Stipulation exempting a vendor from the obligation to answer for eviction if he is in good
faith.
c. Stipulation exempting a vendor from the obligation to answer for eviction if he
acted in bad faith.
d. Stipulation exempting a vendor from the obligation to answer for eviction because it is
contrary to public policy to waive a natural element.
35. If there is stipulation exempting the vendor from the obligation to answer for eviction and the
vendor acted in bad faith because he had knowledge at the time of the sale of the existence of the
fact, to what extent shall the vendor be liable to the vendee in case of eviction?
I. Value of the thing at the time of eviction.
II. Income or fruits of the thing.
III. Cost of suit caused by eviction.
IV. Expenses of the contract if the vendee has paid them.
V. Damages, interests and ornamental expenses.
a. I, II and III
b. I, II, III and IV
c. II, III, IV and V
d. I, II, II, IV and V

36. 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 with the knowledge of the risk of
eviction also known as waiver intencionada, what should be the liability of the vendor in case of
eviction?
a. Vendor shall be liable for the value of the things at the time of eviction plus income or fruits.
b. Vendor shall be liable for the 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 interest.
d. Vendor shall not be liable for anything.
37. In case of doubt or ambiguity, the waiver by the vendee/buyer cf the warranty against eviction is
presumed to be
a. Waiver consciente
b. Waiver intencionada
c. Waiver sobıent:
d. Waiver alluna

38. Where no warranty against eviction has been agreed upon or there was no stipulation exempting
the vendor from liability and the vendor acted in good faith, to what extent shall the vendor be
liable to the vendee in case of eviction?
I. Value of the thing at the time of eviction.
II. Income or fruits of the thing.
III. Cost of suit caused by eviction.
IV. Expenses of the contract if the vendee has paid them.
V. Damages, interests and ornamental expenses.
a. I, II and II
b. I, II, III and IV
c. II, III, IV and V
d. I, II, III, IV and V

39. What are the remedies of the buyer should the immovable sold be encumbered with any non-
apparent easement or servitude within one year from the discovery of burden or servitude if the
one year period from the execution of deed of sale has already lapsed?
I. Rescission of the contract of sale.
II. Indemnification for damages within one year from discovery of easement.
a. I only
b. II only
c. Either I or II
d. Neither I nor II

40. In case of breach of warranty for merchantability committed by the seller, the buyer may, at his
election bring any of the following alternative actions, except
a. Accept or keep the goods and set up against the seller the breach of warranty by way of
recoupment or diminution or extinction of the price.
b. Accept or keep the goods and maintain an action against the seller for damages for breach of
warranty.
c. Refuse to accept the goods, and maintain an action against the seller for damages for breach
of warranty.
d. Ask for annulment of the contract of sale plus damages.

41. May the seller compel the buyer to accept delivery of goods in installments?
a. No, as a general rule, unless there is a stipulation for installment delivery.
b. No under all instances.
c. Yes, as a general rule, unless there is a stipulation to the contrary.
d. Yes under all instances.
42. Barrameda bought a piece of land from Sarmiento for a lump sum of P120,000,00. Aside from
mentioning the boundaries in the contract which is required in the sale of real estate, the contract
also states that the piece of land consists of 1,000 square meters. Before delivery, Sarmiento
discovered that the piece of land actually contains 1,200 square meters.
a. Sarmiento must deliver all the 1,200 square meters; Barrameda must pay P120,000.00
plus an additional amount for the excess of 200 square meters.
b. Sarmiento is required to deliver only 1,000 square meters; Barrameda must pay the
contract price of P120,000.00.
c. Sarmiento must deliver all the 1,200 square meters; Barrameda has to pay only
P120,000.00.
d. Neither party is required to, perform the obligation because of mistake.

43. A, B, and C, are co-owners of an undivided parcel of land. On May 1, A sold his share to X; on
June 1, B sold his share also to X; and on July 1, C sold his snare also to X. Each sale was with a
right to repurchase.
a. X may compel A, B and C to come to an agreement to repurchase the whole land.
b. Each co-owner may exercise his right of redemption on the whole property including the
share of the other two co-owners.
c. Each co-owner may exercise his right of redemption only with respect to his share.
d. Any two of the three co-owners may redeem the property proportionately.

44. R,S and T are co-owners of an undivided parcel of land. R sold his 1/3 interest to T in a deed of
absolute sale. Which is correct?
a. S may exercise the right of redemption on the interest sold by R to T.
b. S cannot exercise the right of redemption.
c. The sale made by R to T is voidable.
d. S may redeem only 1/2 of the interest sold by R to T.

45. D borrowed P50,000.00 from C. The obligation is secured by a mortgage of D's house and lot.
Thereafter, C assigned his credit right to T. Based on the foregoing facts, which of the following
statements is incorrect?
a. The consent of D to the assignment is not required in order that T may collect from D.
b. The assignment of the credit right did not carry with it the assignment of the
mortgage.
c. If D pays C before D was notified of the assignment, D is released from liability.
d. The assignment, to bind third persons, must be in a public instrument and recorded with
the Registry of Property.

46. Mother Lilly purchased from Santiago Farms four horses with different colors: a white, a gray, a
black, and a brown, which Mother Lilly intended to use in a movie to be starred in by four movie
actors each one of whom represents one of the colors. Each horse was certified to be fit by the
veterinarian who was hired. by the parties to examine them. Mother Lilly paid a separate price for
each of the horses. During the filming of the movie, the brown horse was always sick and could
not function as the three others. It was subsequently discovered that it was suffering from an
incurable heart ailment.
a. Mother Lilly may ask for the rescission of the sale of the brown horse only since she paid
a separate price for each of the horses.
b. Mother Lilly may ask for the rescission of the sale of all the horses.
c. Mother Lilly may not ask for rescission of the sale of any horse because she freely
entered into the contract of sale.
 d. Mother Lilly is bound by the sale of all the four horses and must honor such contract
because the veterinarian certified that all horses were fit.

47. S and B executed a deed of absolute sale involving a parcel of land supposedly containing 2,000
square meters. B paid a lump sum of P2,200,000.00 for the purchase. Based on the foregoing
facts, which of the following statements is correct?
a. If the parcel of land is actually 2,200 square meters in area, S has to deliver only 2,000
square meters thereof and B must pay P2,200,000.00 as agreed upon.
b. If the parcel of land is actually 1,800 square meters in area, S must deliver only 1,800
square meters and B has to pay only the price equivalent to 1,800 square meters.
c. If the parcel of land actually contains 2,200 square meters, S must deliver all of
2,200 square meters with B still paying the amount of P2,200,000.00.
d. If the parcel of land actually contains 2,200 square meters, S must deliver all of 2,200
square meters but B must pay a proportionate amount for the additional 200 square
meters in addition to the price of P2,200,000.00.

48. A and B are co-owners of a rural lot not exceeding 1 hectare. The lot is surrounded on its four
sides as follows: on the North, by the road; on the East, by the lot of X consisting of 2 hectares;
on the South, by the lot of Y consisting of 2 1/2 hectares; and on the West, by Z's lot consisting of
2 3/4 hectares. A sells his undivided interest in the agricultural lot to T, who owns several
hectares of rural land in the area. Who has the right of legal redemption over the undivided
interest in the lot sold by A to T?
a. B
b. X
c. Y
d. Z

49. X leased to V a 5 Freezer for two years at a lease rental fee of P1,000 per month and signed an
option in favor of V to buy the freezers at the end of the term of the lease at P50,000. All rental
fee paid are to be considered as partial payment of the sale. After 12 months V was able to pay
the rental fee for 9 months and was in arrears for three months. X terminated the lease contract
and repossessed the freezers. The consequence of the transaction is
a. X can collect the rental fees for three months which are in arrears.
b. X can collect the rental fees for the unexpired 12 months of the lease contract.
c. When X took possession of the generator, he has no further action against V
d. X in terminating the lease and repossessing the generator is obliged to refund the 9
months rental fee, paid by V even if there is a stipulation to the contrary.

50. I. An unpaid seller exercising his right to resell the goods may buy the goods either directly or
indirectly.
II. If a period has been fixed for the payment of the price which has not yet arrived, the seller in
the meantime is bound to deliver the thing sold.
a. True; True
b. True; False
c. False; False
d. False; True

51. The following are the kinds of principal obligations that may be secured by a contracts of pledge,
of real estate mortgage or of chattel mortgage, except
 a. Pure obligations
b. Natural obligations
c. Rescissible obligations
d. None of the above.

52. D borrowed P20,000 from. C. To secure the fulfillment of the loan. D mortgaged a land owned by
his ailing father. Which of the following statements is correct?
a. The contract of mortgage is valid because future property may be pledged or mortgaged.
b. The contract of loan is null and void because the contract of mortgage is null and void.
c. The contract mortgage will become valid upon the death of D's father.
d. The contract of mortgage is null and void because the mortgagor must be the owner
of the property mortgaged at the time it is constituted but the contract of loan
remains to be valid.

53. D borrowed P10,000 from C. To secure the fulfillment of the loan, D pledged his laptop. On the
date of maturity of the loan, D failed to pay the loan. As a result, D and C agreed that the pledged
laptop shall be owned by C in full satisfaction of the secured contract of loan. Which of the
following statements is correct?
a. C becomes the owner of the laptop by reason of dacion en pago which is governed
by Law on Sales.
b. The laptop cannot be alienated for the payment of the loan.
c. C does not become the automatic owner of the laptop upon D's failure to pay the loan
because their subsequent agreement is considered a pactum commissorium which is
contrary to law and public policy.
d. Their subsequent agreement for the payment of the loan shall be governed by law on
obligation because that is a novation

54. What is the nature of a contract of pledge, of chattel mortgage, of real estate mortgage or of
antichresis?
a. It is divisible if the principal contract is joint.
b. It is indivisible if the principal contract is solidary.
c. It is divisible whether the principal contract is joint or solidary.
d. It is indivisible whether the principal contract is joint or solidary.

55. D borrowed P10,000 from C and pledged his ring and watch with P4,000 and P6,000 value
respectively. They agreed that the ring will secure P4,000 of the loan and the watch will secure
the balance of the loan. After several days, D pays P4,000 to C. Which of the following
statements is correct?
a. The contract of pledge on the watch is extinguished.
b. The contract of loan is fully extinguished.
c. D cannot demand the release of his ring because a contract of pledge is indivisible.
d. D may compel C to return the ring because the contract of pledge on the ring is
extinguished.

56. A and B jointly borrowed P10,000 from C. In order to secure their respective obligations, A
pledged his cellphone while B pledged his laptop. At the maturity date of the loan. A paid P5,000
of the loan. Which of the following statements is correct?
a. The contract of pledge on the cellphone is extinguished.
b. The obligation of B is extinguished.
c. A cannot demand the release of his cell phone because a contract of pledge is indivisible.
d. The contract of pledge on the laptop is extinguished.
57. The following are the characteristics of a contract of pledge, except
a. Consensual - It is perfected by mere consent.
b. Accessory - It has no independent existence of its own because there must be a contract
of loan.
c. Unilateral - It creates an obligation on the part of the creditor to return the thing upon the
fulfillment of the principal obligation
d. Subsidiary - The obligation incurred does not arise until the fulfillment of the principal
obligation which is secured.

58. In case the cause or consideration of the contract of pledge is not stipulated, what is the cause or
consideration of a contract of pledge?
a. It has no cause or consideration
b. The cause or consideration of the principal obligation or contract of loan.
c. The cause or consideration is the liberality of the pledgor.
d. The cause is the service romenerated.

59. What is the nature of a contract of pledge?

a. Consensual contract
b. Real contract
c. Formal contract
d. Solemn contract

60. In case the thing pledged is alienated by the debtor-pledgor to third person, what is the effect of
the consent of the pledgee to the alienation made by the pledgor of the thing pledged to third
person?
a. The thing pledged remains to be owned by the debtor-pledgor
b. The ownership of the thing pledged is transmitted to the buyer.
c. The creditor-pledgee loses possession of the thing pledged.
d. The contract of pledge is already extinguished.
61. Grace obtained a loan from Jojo in the amount of P1M with Mar serving as guarantor. Rody
pledged his cellphone to secure the debt of Grace. If Rody pays the P1M loan of Grace, which is
correct?
a. There will be no legal subrogation if Grace does not consent to the payment of Rody.
b. Rody cannot collect the PIM from Grace if the latter does not consent to the payment of
Rody.
c. Rody can collect the P1M from Mar if Grace will not be able to pay Rody.
d. Mar is not liable to Rody,

62. If two or more things are pledged, who has the right to choose which thing will be sold in the
absence of stipulation?
a. Pledgor
b. Pledgee
c. Debtor
d. Government

63. Pledge may be extinguished directly or indirectly. The following are the modes of extinguishing
the contract of pledge directly, except
a. When the principal obligation secured by the pledged is extinguished.
b. Return by the pledgee of the thing pledged to the pledgor or owner.
c. Renunciation or abandonment in writing by the pledge of the pledge.
 d. Appropriation of the thing pledged by the pledgee if the thing pledged is not sold in the
first and second auctions.
64. Which of the following direct modes of extinguishing contract of pledge impliedly extinguish the
principal obligation or contract of loan?
I. Return by the pledgee of the thing pledged to the pledgor or owner.
II. Renunciation or abandonment in writing by the pledge of the contract of pledge.
III. Sale of the thing pledged in public auction in case of default by debtor regardless of the
amount of the net proceeds of sale.
IV. Appropriation of the thing pledged by the pledgee in case the thing pledged is not sold in
the first and second public auctions.
a. I and I
b. III and IV
c. I and III
d. II and IV
65. Which of the following stipulations in a contract of pledge is null and void?
I. A stipulation which provides that the contract of pledge is not extinguished by the return
of the thing pledged.
II. A stipulation allowing the appropriation by the pledgee of the thing pledged in case the
same is not sold in the first and second auctions.
III. A stipulation for the recovery of deficiency in case the proceeds from the sale of the thing
pledged is less than the amount of the obligation
a. I and III
b. II and III
c. I and II
d. I, II and III
66. Which of the following statements is incorrect in case the pledgee renounces or abandons in
writing the contract of pledge?
a. The contract of pledge is extinguished but the contract of loan remains
b. The acceptance by the pledgor is not necessary for extinguishing the contract of
pledge.
c. The pledgee becomes a depositary upon renunciation if in the meantime, the thing
pledged is not yet returned to the owner
d. The return of the thing pledged is necessary for extinguishing the contract of
pledge for this mode of contract of pledge extinguishment

67. What is the effect of sale at public auction of the thing pledged?
a. It does not extinguish the contract of pledge.
b. The contract of pledge and principal/contract of loan obligation shall be extinguished if
the proceeds of the sale are equal to the amount of the principal obligation, interest and
expenses in a proper case.
c. The contract of pledge and principal obligation contract of loan shall be extinguished if
the proceeds of the sale exceed the amount of the principal obligation, interest and
expenses in a proper case.
d. The contract of pledge and principal obligation contract of loan shall be
extinguished whether or not the proceeds of the sale are equal to the amount of the
principal obligation, interest and expenses in a proper case.

68. DLSU pledged its notes receivable from a parent to a factor on January 1, 2016 with remaining
term of 30 days or maturity date of January 31, 2016. The face value of the notes receivable is
P1,000,000 with maturity value of P1,200,000. The notes receivable is pledged for a note payable
 of P1,100,000 inclusive of interest. If the factor-pledgee collects the P1,200,000 from the parent
on January 31, 2016, who shall be entitled for the excess of P100,000?
a. DLSU, the pledgor-debtor
b. Parent
c. Factor, the pledgee-creditor
d. None of the above

69. The provisions on conventional pledge on the possession, care and sale of the thing as well as on
the termination of the pledge shall be applicable to legal pledge except with respect to the sale of
the thing as follows. The following are the rules applicable to legal pledge on the sale of the thing
pledged, except
a. The thing may be sold only after demand of the amount for which the thing is
retained.
b. The public auction shall take place within one month after such demand.
c. In case there is deficiency from the public sale, the pledgee-creditor may still recover
the deficiency even if not stipulated.
d. After payment of debt and expenses, the remainder of the price of sale shall be
retained by the pledgee-creditor

70. In case of legal pledge or pledge by operation of law, if the thing held in pledged by operation of
law is sold by the creditor in a public auction resulting in excess, who shall be entitled to the
excess?
a. The debtor/owner of the thing sold even if not stipulated.
b. The creditor or foreclosing party if stipulated.
c. The creditor or foreclosing party even if not stipulated.
d. The debtor/owner of the thing sold only if stipulated.

71. The following are the important characteristics of contract of real estate mortgage, except
a. Accessory - It cannot exist without a principal obligation
b. Indivisible - It creates a lien on the whole or all of the properties mortgaged, which
continues until the obligation is secured has been fully paid.
c. Real right - It creates a lien on the property mortgaged
d. Real contract - It is perfected by the delivery of the thing mortgaged.
72. What is the status contract of real estate mortgage if the property covered as collateral is a
personal property instead of real property
a. The contract of real estate mortgage is always void because the subject matter of real
estate mortgage is immovable property
b. The contract of real estate mortgage will be valid to both contracting parties and even
third persons.
c. Third persons who are not directly affected by the real estate mortgage may ask for
the declaration of nullity of the real estate mortgage contract
d. None of the above
73. In case of judicial foreclosure, if upon the trial in such action the court shall find the facts set
forth in the complaint to be true, shall certain the amount due to the plaintiff upon the mortgage
debt or obligation, including interest and other charges as approved by the court, and costs, and
shall render judgment for the sum so found due and order that the same be paid to the court or to
the judgment obligee. This is known as equity of redemption of judgment debtor and the amount
shall be paid by the judgment debtor. What is the period for exercise of equity of redemption in
case of judicial foreclosure?
a. Within a period of not less than 90 days nor more than 120 days from the entry
of judgment.
b. Within a period of not less than 1 year nor more than 2 years from the entry of
judgment.
c. Within a period of not less than 90 days nor more than 1 year from the entry of
judgment.
d. Within a period of not less than 120 days nor more than 1 year days from the entry of
judgment.

74. When a real property is foreclosed and sold under Act No. 3135 in case of extra-judicial
foreclosure of Real Estate Mortgage, the public auction sale shall be made at the
a. Province where the property is situated
b. Domicile of the mortgagor
c. Domicile of the mortgagee
d. At any place in the Philippine

75. Notwithstanding Act 3135. Section 47 cf RA 8791 (General Banking Laws) provides that
juridical persons whose property is being sold pursuant to an extrajudicial foreclosure by banks,
shall have the right of redemption to be exercised
a. within 3 months after the foreclosure and sale but not after the registration of
the certificate of foreclosure sale with the applicable Register of Deeds.
b. Within 6 months after the foreclosure and sale but not after the registration of the
certificate of foreclosure sale with the applicable Register of Deeds.
c. Within 1 year after the foreclosure and sale but not after the registration of the
certificate of foreclosure sale with the applicable Register of Deeds.
d. Within 2 years after the foreclosure and sale but not after the registration of the
certificate of foreclosure sale with the applicable Register of Deeds.

76. Indicate the proper order on how the proceeds of sale from judicial or extrajudicial foreclosure of
Real Estate Mortgage shall be distributed:
I. Cost of sale.
II. Claim of the person foreclosing the mortgage.
III. Claims of junior encumbrances in the order of their priority.
IV. Mortgagor or his agent.
a. I-II-III -IV
b. I-III- II-IV
c. II-I-IV-III
d. III- II-I- IV

77. In case the proceeds of the sale from judicial or extrajudicial foreclosure of Real Estate Mortgage
is lower than the principal obligation and costs, which is true?
a. The mortgagee may recover the deficiency in the absence of stipulation to the
contrary.
b. The mortgagor shall not pay the deficiency in the absence of stipulation to the contrary.
 c. The mortgagee shall always recover the deficiency.
d. The mortgagor shall always pay the deficiency

78. The following are the rules for the place of registration of Chattel Mortgage, except
a. As a general rule, it must be recorded in the Chattel Mortgage Register of the province
where the mortgagee resides.
b. It must be recorded in both Chattel Mortgage Registers of the provinces where the mortgagor
resides and where the property is located.
c. If the mortgagor is domiciled outside the Philippines, the mortgage must be registered in the
Chattel Mortgage Register where the property is located.
d. With respect to vessel, it must be registered in the office of the Philippine Coast Guard of the
port of documentation of the vessels.

79. What is the grace period granted to mortgagor or the minimum period required to lapse from the
time of the breach of the condition in Chattel Mortgage before the mortgagee may extrajudicial
sell or foreclose in the public auction the mortgaged property?
a. At least 30 days
b. At least 60 days
c. At least 90 days
d. At least 120 days

80. In contract of antichresis, what shall be the basis of measurement of the fruits in its application to
the interest and principal of the loan?
a. The actual market value of the fruits at the time of the application.
b. The actual market value of the fruits at the time of harvest.
c. The actual market value of the fruits at the time of sale of fruits.
d. The actual market value of the fruits at the time of perfection of the contract of antichresis.

81. Who shall be liable to pay the real property taxes and expenses necessary for the repair and
preservation of the real property used as collateral in contract of antichresis?
a. Always antichretic creditor
b. Always debtor
c. Antichretic creditor in the absence of stipulation to the contrary
d. Debtor in the absence of stipulation to the contrary

82. D borrowed P30,000.00 from C. To secure the debt, D pledged his ring,
wristwatch, and necklace. Before the debt could be paid, C died leaving X, Y and Z as heirs. By
agreement among the heirs who inherited the credit, the ring would secure the share of X of the
credit, the wristwatch the share of Y, and the necklace the share of Z. Later, D pays X
P10,000.00.
a. X may release the pledge of the ring.
b. D can demand the extinguishment of the pledge of the ring, wristwatch and necklace
because there has been partial payment.
c. The pledge of the ring will remain until the shares of Y and Z are paid by D.
d. D can demand the extinguishment of the pledge of the ring.
 83. D borrowed P10,000.00 from C the debt being payable in 6 months. To secure the debt, D
promised to pledge his ring within 2 weeks. Two weeks had already lapsed but D had not yet
constituted the pledge.
I. C may demand the constitution of the pledge.
II. D loses the benefit of the period given to him to pay the debt; hence, C may demand
immediate payment of the debt.

a. I is true; II is false.
b. I is false; II is true.
c. Both statements are true.
d. Both statements are false

84. D pledged his computer to secure a loan which he obtained from C. The debt which amounts to
P10,000.00 is due after 60 days. Before the due date, C executed an instrument abandoning the
pledge.
I. D's debt of P10,000.00 is extinguished.
II. The pledge of the computer is extinguished even if D has not yet accepted the
renunciation of the pledge.
III. The pledge is not extinguished until C returns the ring to D.
IV. The pledge is extinguished even if C has not returned the ring to C.
 
Based on the foregoing, which is false among the four statements?

a. II and IV.
b. I and II.
c. I and III.
d. II and III.

85. A, B and C obtained a loan from X in the amount of P60,000.00. To secure the debt, A pledged
his wristwatch; B, his necklace; and C,his diamond ring. A pays his share of the debt amounting
to P20,000.00.
I. The obligation of A, B and C is solidary.
II. The obligation of A, B and C is joint.
III. A may demand the return of the wristwatch after payment of his share of the debt.

a. II and III are true.

b. II and III are false.
c. I and III are true.
d. I and III are false.

86. D obtained a loan of P5,000.00 from C. The obligation is secured by a pledge of D's ring which
he delivered to C. Both the loan and the pledge were in a private instrument. While the loan was
outstanding, D sold the ring through a public instrument to X who was not aware of the pledge.
Under the deed of sale, D obliged himself to deliver the ring physically to X after a week. Before
X could obtain actual delivery of the ring, he learned that D had earlier pledged the same and that
C was selling the ring in a public sale because of D's default in the payment of his debt.
a. C can sell the ring to satisfy his claim.
b. X is not bound by the pledge made by D to C.
c. X is bound by the pledge made by D to C
d. X did not acquire ownership of the ring from D
87. I. If the goods sold are in the possession of a third person, the seller is deemed to have delivered
the goods to the buyer if the third person acknowledges to the buyer that he holds the goods in the
buyer's behalf.
II. A negotiable document of title becomes non-negotiable if it is stamped with the mark “non-
negotiable”.
a. True; True
b. True; False
c. False; False
d. False; True

88. I. The delivery of an order document of title without any indorsement does not constitute
negotiation.
II. A bearer document of title becomes an order document of title if it is specially indorsed.
a. True; True
b. True; False
c. False; False
d. False; True

89. I. A warehouse receipt is also a contract-between the warehouseman and the depositor of the
goods.
II. When a thing is purchased from a merchant's store fair or market, the buyer acquires title to
the thing although the seller may have stolen it or acquired it from a thief.
a. True; True
b. True; False
c. False; False
d. False; True

90. I. The delivery of specific goods to a carrier or other bailee for the purpose of transmission to the
buyer generally transfers ownership of the goods to the buyer.
II. In “sale on approval”, the buyer becomes the owner of the thing upon delivery, but he may
revert such ownership to the seller by returning it.
a. True; True
b. True; False
c. False; False
d. False; True

91. I. The expenses for the execution and registration of the sale shall be borne by the vendee, unless
there is a stipulation to the contrary.
II. If the building should have been sold to different vendees the ownership shall be transferred to
the person who may have taken possession thereof in good faith.
a. First statement is true, second statement is false.
b. First statement is false, second statement is true.
c. Both statements are true.
d. Both statements are false
92. What is the remedy of the pledgor-owner if there are reasonable grounds to fear the destruction or
impairment of the thing pledged, without the fault of the pledgee?
a. To require that it be deposited with a third person.
b. To ask for the extinguishment of the contract of pledge.
c. To ask for the extinguishment of the contract of loan.
d. None of the above.

93. If there are reasonable grounds to fear the destruction or impairment of the thing pledged, without
the fault of the pledgee, which is correct?
a. The pledgor-owner may ask for the return of the thing, upon offering another thing in
pledged, provided the latter is of the same kind as the former and not of inferior quality even
it is already sold in public auction by the pledgee-creditor
b. The pledgee-creditor may cause the sale of the thing pledged at a public sale and the
proceeds of the auction shall be a security for the principal obligation in the same
manner as the thing originally pledged. However, the pledgee is bound to advise the
pledgor, without delay, of any danger to the thing pledged.
c. The right of the pledgor-owner is superior to the right of the pledgee-creditor.
d. The contract of pledge is extinguished by the sale of the thing pledged in the public auction.

94. The following are the rights of a third person who pledges his own movable property to secure
debt of another, except
a. To be indemnified by the debtor if he pays the creditor.
b. To be subrogated to all the rights of the creditor against the debtor if he pays the
creditor.
c. To be released from liability in the cases provided by law.
d. To become principally liable.

95. A third person who pledges his own movable property to secure the debt of another shall be
released from liability in the following cases and may ask for the return of the thing pledge from
the pledgee, except
a. If the creditor voluntarily accepts immovable or other property in payment of the debt
even if the creditor thereafter loses the same by eviction.
b. If an extension of time is granted to the debtor by the creditor without pledgor's
consent.
c. If through some act of the creditor, the pledgor cannot be subrogated to the rights,
mortgages and preferences of the creditor.
d. None of the above.

96. The following stipulations concerning real estate mortgage are null and void, except
a. A stipulation forbidding the owner from alienating the immovable mortgaged.
b. A stipulation providing that the mortgagee shall become the automatic owner of the
property mortgaged upon failure of the debtor to pay the principal obligation.
c. Tipo or upset price which refers to price set by the parties as the amount at which the
property at which the property will be sold at public auction.
d. A stipulation prohibiting a second mortgage with respect to property registered
under the Torrens System.
97. It refers to the right of mortgagor to redeem the mortgaged property after his default of the
performance of his obligation by paying the obligation but before the property is sold in order to
prevent the public sale.
a. Equity of redemption
b. Right of redemption
c. Right of preemption
d. Equity of preemption

98. In case the judgment debtor in judicial foreclosure failed to exercise his equity of redemption, the
property shall be ordered by the trial court to be sold at public auction. In such a case, the
foreclosure sale, generally, when confirmed by an order of the court, shall operate to divest the
rights of all the parties to the action and to vest their rights in the purchaser. May the judgment
debtor still redeem the property already foreclosed and sold in public auction?
a. Yes because he has the right of redemption which is 1 year from the confirmation of
the sale.
b. No he can never redeem the property because the equity of redemption has already
expired.
c. Yes because he can exercise his equity of redemption even beyond the 90 days
from entry of judgment or even after the foreclosure sale itself as long as it is
prior to the court's order of confirmation of the sale.
d. Yes because his right of redemption is not subject to a period.

99. The following may become object of chattel mortgage, except

a. Personal property
b. Movable property
c. Intangible assets
d. Real or immovable property

100. I. The mortgagee is not obligated to file an independent motion for the enforcement of his
credit or loan secured by a chattel mortgage. To do otherwise would defeat the purpose of the
chattel mortgage, which is to give him preference over the mortgaged chattels for the satisfaction
of his credit.
II. A mortgagee who sues and obtains a personal judgment against a mortgagor upon his
credit waives thereby his right to enforce the mortgage securing it and therefore no longer
allowed to foreclose the chattel mortgage.
a. True; True
b. True; False
c. False; False
d. False; True